2022
ANNUAL REPORT
3P Learning Limited
ABN 50 103 827 836
FY22 Highlights
1. “Underlying” is a non-statutory measure and is the primary reporting measure used by the CEO, CFO and Board of Directors for assessing
the performance of our business.
2. pcp: prior comparison period which was prior to the merger with Blake eLearning Pty Ltd (Blake) and is compared to FY21.
3. Billings are reported ‘gross’ before commissions are deducted by Apple or Google and exclude Workbooks. FY21 is based
on Blake unaudited management accounts.
4. B2B Distributor Licences acquired as part of the merger with Blake.
5.5. Re-acquired effective 1 January 2022.
3P LEARNING
OVERVIEW
I 3P Learning's Reach
3PL is a global market leader in edtech programs for reading, writing and mathematics that are
engaging, motivational, and effective for students as well as easy-to-use for teachers.
~
ala
17K+
SCHOOLS
179
COUNTRIES
5.5M+
STUDENTS
t
~
218M
LESSONS COMPLETED
EMPLOYEES
Reading
© 3P Learning
Purpose and Values
Better Ways To Learn - Our Purpose at 3P Learning
At 3P, we are passionate about
better ways to learn.
We want every child to learn the
fundamental skills required for
academic success, and to develop a
lifelong love of learning.
At 3P, we are passionate about
making a difference.
We recognise that literacy and
numeracy are core life skills.
We create learning programs that
make a real difference in the lives of
children, parents and teachers.
At 3P, we are passionate about
positive learning experiences.
Our programs are motivating and
engaging, where learning is fun,
playful and most of all, successful.
We strive to make learning a joyful
We strive to make learning a joyful
experience and believe that Practice
and Play, results in Progress.
At 3P, we bring our passion for
better ways to learn into everything
we do.
We continuously improve our
programs and our technology
so that learning with our programs is
something to look forward to.
3PL’S
VALUES
Create Lifelong Learners
Find Better Ways
Make it Happen
Be Authentic
Thrive Together
Corporate Social Responsibility
3PL is committed to creating a positive impact on our society and environment. Our company
purpose: ‘Better Ways to Learn’ means that our people and products are uniquely placed to
improve the lives of students, teachers, schools and communities.
3P’s Giving Back initiatives identify and enable projects that can achieve this. They focus on the
contribution we make to education, both locally and globally. Giving Back has four tiers:
1. Working with partners
3P works with our customers to enhance their impact.
Continued support of the Click Foundation in South Africa in FY22, with free or subsidised
licences of our products. The Click Foundation is not only addressing the literacy crisis in Africa
but equipping young learners with the technological skills required for future success. We have
been able to reach more than 300 000 students in under-privileged schools in South Africa this
year.
2. Supporting schools in need
3P grants licences and support directly to schools in need.
In FY22 this pilot initiative offered product licenses to students displaced by the war in Ukraine and
to students in need from a school in India.
3. Supporting employees —‘passion projects’
3P grants licences to employees’ education-focused
projects.
In FY22, we launched this program whereby employees
In FY22, we launched this program whereby employees
can give up to 50 product licenses to an education project
of their choice in their community. This program can be
linked with employee “3P Days”—additional annual leave
to participate in activities that resonate with an employee’s
individual purpose and passions.
4. Supporting employees —‘workplace giving’
3P matches charitable donations by
employees.
Heading into FY23, 3PL will expand
the Giving Back program, using the
Click Foundation model with partners
in other regions to launch a global
workplace giving program.
I am pleased to report that 3PL in the 2021-22 financial year has delivered revenue of $97.2M,
at the top end of our previously issued guidance, and underlying EBITDA within guidance at
$13.8M.
This is the first full year of trading since the significant acquisition of the Blake eLearning
business in May of 2021. Integrating the Blake business has proceeded well, and we have
extracted about $10M in annual cost savings from the combined business. We have also done
a lot of work to align cultures and developed an ambitious product plan that we believe will set
us up for strong growth in the medium term.
By acquiring Blake, 3PL gained a much larger exposure to the direct-to-consumer market,
which now makes up about 40% of our overall sales. This market received a significant boost
during the height of worldwide Covid lockdowns. The good news is that not only have we
maintained these Covid lockdown sales numbers, we have increased them by 13%. And we
have done this while maintaining our overall gross margins from this part of the business by
being disciplined in our marketing expenditures, rather than “buying” market share.
The revenue in our direct-to-schools business increased 8%, while Annual Recurring Revenue
has basically been flat, which we think is a good result in a year where we made significant
changes to our sales teams. We also stopped actively selling the ReadiWriter and Spellodrome
programs to focus on our main three programs. While two of our three “hero” products,
Reading Eggs and Mathseeds, grew sales, the third, Mathletics, decreased by a modest
amount. We expect to grow sales materially again in Mathletics, in 2023-24 financial year, when
we release a significant rebuild of the program.
The overarching strategy of 3PL is to really help students acquire the key academic skills of
reading, writing and maths (3Rs). We want to focus our energies on anything that can
significantly improve outcomes in these areas, especially in grades PreK-8. This is why we are
making a significant investment in our writing skills program called Writing Legends, that we
plan to release in the second half of the 2022-2023 financial year. We think Writing Legends
can become the fourth of our “hero” products in the next few years.
The other areas that we believe can improve outcomes in the 3Rs are assessment, to give
teachers immediate feedback on what is working for each student, and services to assist with
professional development of teachers.
We think integrating these types of programs with our key skills programs will further improve
learning outcomes. We will look at entering these areas in the next three years through a
combination of strategic acquisition and organic development.
In our last presentation we mentioned possible opportunities in the Corporate Social
Responsibility (CSR) area, and with deals at the Ministry of Education (MOE) level. We do not
believe the previously announced deal with the Middle East MOE will proceed, despite
considerable investment of time and effort over the last three years.
We still see potential for more modest deals in the CSR area, with typical deal value in the
hundreds of thousands, rather than millions. We will continue exploring opportunities in these
areas, but in a way that won’t divert us from our ambitious product roadmap and doing what we
know and do best: selling to schools and parents.
For the year ahead we expect double-digit growth in both revenue and underlying EBITDA.
We expect revenue to be in the $111M to $115M range, and underlying EBITDA in the $15M to
$18M range. Cash generation, before investments, is expected to be equal or exceed the FY23
underlying EBITDA range. This is underpinned by good growth in the consumer business and
revenue in our schools business no longer impacted by the merger-related revenue
recognition treatment.
As mentioned in previous presentations, there was a change in revenue recognition of Blake
school sales post-merger which had the effect of decreasing revenue by around $10M in
FY21-22 and increasing it by around the same amount in FY22-23. The underlying sales to
schools in FY22-23 are only expected to grow in single-digits. We are expecting much better
growth in schools once we release Writing Legends and Mathletics New Courses in FY23-24.
I am happy with what 3PL has achieved in the last 12 months since it combined with Blake.
We are building a lot of great new programs that we think will make a real difference to
learning outcomes in the key academic skills. Most of these new programs won’t be seen until
FY23-24 so I’m pleased we can still expect good growth in sales and EBITDA in the meantime.
Yours sincerely
Matthew Sandblom
Executive Chairman
In the first full financial year since acquiring Blake eLearning, we have successfully merged the
two businesses into one, creating a strong vision for product, our people, and further
enhancing 3PL’s opportunities for growth.
After completing the operational integration work, we focused on developing product strategy,
sunsetting lower performers and expanding our hero products offering into Reading, Writing
and Maths with the acquisition of Writing Legends.
On the people side, we introduced the first stage of our ESG program and built strong People &
Culture engagement with our updated purpose statement, Better Ways to Learn, and company
values.
It is a credit to our team’s talent, passion and dedication that, while undergoing this significant
transformation, we also delivered the financial performance goals we set out to achieve,
including annualised synergy savings of $10M.
As mentioned in our Chairman’s Letter to Shareholders, we finished FY22 with revenue of
$97.2M, at the upper end of market guidance. Underlying EBITDA of $13.8M was at the mid-
point of market guidance.
Underlying cash generation before tax was also strong at $22.6M for the year, as shown below,
with closing cash balance of $31.1M at 30 June 2022.
This includes product development costs of $27.6M.
We capitalised $3.1M investment in Writing Legends and $1.5M in Mathseeds Prime and Master
Math Island, which are new products. The remaining $23M was expensed in FY22, as detailed
in this Product Development Bridge.
Performance across our operating segments in FY22 was as follows:
1. B2C: Double-digit revenue growth
B2C delivered another solid year with 13% gross billings growth (17% net billings
growth), underpinning revenue of $39.3M. Net billings contribution margin was 53%,
including all direct sales and marketing costs, and commission paid to Apple and
Google.
Australia and US were our strongest markets and, together with the UK, accounted for
76% of the year’s billings. Our direct Website channel improved 18% on last year,
reflecting our continued investment in direct-to-consumer digital marketing expertise.
Google was our fastest growing channel at 29%, albeit from a smaller base.
2. B2B: Single-digit revenue growth, steady ARR, more profitable
Revenue from B2B this year was $57.9M, which was 8% higher than last year, with ARR
steady at $64.4M.
This was a good result given the restructure of our US sales team, and the more
focused product suite sunsetting ReadiWriter and Spellodrome to concentrate
development on Mathletics and Writing Legends. Exit ARPU was 6% higher at $12.40.
3. Emerging markets and CSR deals
We followed up potential opportunities with Ministries of Education in the Middle East
and the Americas during FY22 but have not been successful.
These whole-of-country deals take time and include significant customisation of our
products. Without tangible financial commitment, they take up resources that can be
better deployed elsewhere.
We will continue seeking opportunities in this space but will direct more of our efforts to
CSR deals aligned with 3P events such as World Maths Day, that provide more
certainty.
Key initiatives for FY23 – People, Product, Position and Profitability
For FY23 and beyond our focus will be on four key areas:
• People
Developing our in-house capability and talent, as well as attracting and retaining high
performers for all key roles.
• Product
Building educational programs that are engaging, motivational, and effective for
students as well as easy to use for teachers so we have a platform for future success.
• Position
Expanding our products and services to position 3PL as the premier company for the
core academic skills of Reading, Writing and Maths.
• Profitability
Achieving our people, product, and positioning goals to increase topline revenue while
keeping a close eye on costs to further improve profitability and cash generation.
It’s been an outstanding team effort to bring our combined talent and expertise under one roof
to deliver Better Ways to Learn and a solid financial result for FY22.
In the year ahead, I look forward to even greater innovation and success for the benefit of our
customers, our shareholders, and all lifelong learners.
Yours sincerely
Jose Palmero
Chief Executive Officer
Directors' report
Directors' report - remuneration report
Auditor's independence declaration
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of 3P Learning Limited
Shareholder information
Corporate directory
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84
3P Learning Limited
Directors' report
30 June 2022
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of 3P Learning Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it
controlled at the end of, or during, the year ended 30 June 2022.
Directors
The following persons were directors of 3P Learning Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Matthew Sandblom - Non-Executive Chairman (appointed on 28 May 2021); Executive Chairman (appointed on 24 August
2021, effective on 25 August 2021)
Mark Lamont
Katherine Ostin (appointed on 6 August 2021)
Allan Brackin (appointed on 6 August 2021)
Belinda Rowe (appointed on 20 September 2021)
Samuel Weiss (resigned on 17 September 2021)
Claire Hatton (resigned on 24 September 2021)
Principal activities
The Group operates within the education technology sector. During the financial year, the principal continuing activities of
the Group consisted of the development, sales and marketing of educational software and ebooks to schools and to parents
of school-aged students, delivered via a software-as-a-service subscription model.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
Business overview
The Group is a global leader in online education and adaptive and collaborative learning. The Group's suite of mathematics
and literacy products are designed to facilitate dynamic and engaging learning experiences for educator and learner alike to
address the complex challenges faced by teachers and students in the modern classroom and at home.
The Group has over 360 educators, engineers, product designers and other personnel around the world, servicing schools
and parents in more than 100 countries. Today, the Group is trusted by almost 6 million students in over 17,000 schools
across the world. The Group's mission is to create the teaching moments that inspire learning.
A reconciliation of underlying earnings before interest, tax, depreciation and amortisation ('EBITDA') to statutory loss before
income tax benefit for the year is as follows:
Loss before income tax benefit
Administrative expenses - buyback of distributor rights
Depreciation and amortisation expense
Employee expense - restructure and integration
Finance costs
Impairment expense
Interest income
Professional fees - corporate advisory costs
Underlying EBITDA*
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(1,182)
(11,778)
873
11,937
1,494
189
-
(67)
508
-
8,313
2,450
237
4,818
(115)
5,476
13,752
9,401
*
Underlying EBITDA represents earnings before interest, tax, depreciation and amortisation, excluding corporate
advisory, restructure and integration costs specifically associated with the acquisition of Blake eLearning Pty Ltd and
costs associated with the buyback of distribution rights.
2
3P Learning Limited
Directors' report
30 June 2022
The directors have provided underlying EBITDA after careful consideration of the requirements and guidelines contained in
ASIC’s Regulatory Guide 230 'Disclosing non-IFRS financial information'. Underlying information, including this reconciliation
to net profit after income tax expense, has been provided to meet the demands from users of the financial reports for
information to better understand aspects of the Group’s performance. The directors believe that underlying EBITDA is the
most appropriate measure of the maintainable earnings of the Group and thereby best reflects the core drivers of, and
ongoing influences upon, those earnings.
Revenue
Total revenue for the year ended 30 June 2022 was $97,221,000 (30 June 2021: $57,448,000). The acquisition of Blake
eLearning Pty Ltd (‘Blake’ or ‘Acquisition’) occurred on 28 May 2021 with $3,453,000 revenue contribution for 28 May 2021
to 30 June 2021. The year ended 30 June 2022 includes a full year of Blake revenue.
Performance
The loss for the Group after providing for income tax and non-controlling interest amounted to $536,000 (30 June 2021: loss
9,369,000).
Depreciation and amortisation have increased as a result of the Acquisition which has resulted in a higher asset base.
During the year, a distributor in the Canadian market relinquished their exclusive distribution rights to the Group for $873,000.
Corporate advisory costs, and integration and restructuring costs associated with the Acquisition were $2,002,000 (30 June
2021: $7,926,000). Integration activities have been completed with approximately $10,000,000 in synergies achieved since
the Acquisition.
In the previous year, an impairment expense of $4,818,000 was recognised on the ReadiWriter product suite which was
sunset following a product strategy reset to focus on ‘hero products’.
As at 30 June 2022, the Group has $31,127,000 (30 June 2021: $24,906,000) of cash and cash equivalents and no debt.
Surplus cash to operating requirements are placed on term deposit with third party deposit institutions to maximise interest
income.
Segment review
Segment revenue for the year is as follows:
Business-to-School ('B2B')
Business-to-Consumer ('B2C')
Corporate
Total Revenue
Segment Underlying EBITDA is as follows:
Business-to-School ('B2B')
Business-to-Consumer ('B2C')
Corporate
Total Underlying EBITDA
30 June 2022 30 June 2021 Change
$'000
$'000
$'000
Change
%
57,933
39,288
67
97,288
53,671
3,777
115
57,563
4,262
35,511
(48)
39,725
7.9%
940.2%
(41.7%)
69.0%
30 June 2022 30 June 2021 Change
$'000
$'000
$'000
Change
%
7,475
9,202
(2,925)
13,752
11,164
1,680
(3,443)
9,401
(3,689)
7,522
518
4,351
(33.0%)
447.7%
(15.0%)
46.3%
B2B segment
Revenue in the B2B segment has increased by $4,262,000. The Acquisition contributed increased revenue of $11,494,000.
This was offset by a change in revenue recognition on Blake products sold to schools from the date of acquisition. Revenue
recognition from acquisition date was recorded on a straight-line basis over the service period consistent with licence
revenue, whereas previously it was recorded at the point of sale consistent with net commission revenue. Underlying EBITDA
has decreased by $3,689,000 driven by increased product and technology costs due to the Acquisition offset by realised
synergies in sales and marketing costs, and the flow on impact from increase in revenue.
3
3P Learning Limited
Directors' report
30 June 2022
B2C segment
Revenue in B2C has increased by $35,511,000 due to the contribution from the Acquisition. Underlying EBITDA has
increased by $7,522,000 due to increased revenue offset by increased sales and marketing costs in the B2C market for the
previous Blake business.
Material Business Risks
The material business risks faced by the Group that are likely to have an effect on the financial prospects of the Group are
outlined below:
Competition risks: The Group operates in a highly competitive industry and there are a large number of online education
participants targeting the school K-12 segment, many with significant resources and access to capital.
Technology risks: The Group’s technology platforms and systems might be disrupted by new technologies or become
obsolete, which could affect the Group’s reputation, ability to generate income and financial performance.
Privacy and Data Security risks: As a technology-focused education business, compliance with privacy and data security
legislation relating to managing information security and safeguarding customer and student data remains a paramount key
consideration and impacts the way the Group approaches everything it does and the decisions it makes. The Group takes
the storage of this data incredibly seriously and place the highest priority on ensuring its security.
Revenue risk: The K-12 market is driven by the schools’ ability to fund the purchase of education technology for their students.
A significant decline in school funding, changes to schools’ purchasing decision processes, or education regulatory changes
in any market could result in reduced demand for the Group’s products. Sales made directly to consumers may also be
impacted by general economic performance of a region or any regulatory changes which impact online education or online
sales.
Commercial contractual risk: The Group may from time to time enter into agreements with a foreign government body. These
contracts have the potential to be material and therefore there are increased liability risks through events such as breach of
contract, claims, disputes or litigation and increased business risk such as failure to build strong relationships or failure to
meet contractual objectives. As at 30 June 2022, no such material contracts were in place.
Exchange rate risk: Volatility in exchange rates can impact the Group’s ability to maintain or grow margins, however, to a
significant extent the Group’s business currently enjoys natural hedges: the revenue that the Group obtains in a particular
foreign currency closely matches the expenses it incurs in that currency (such as the British Pound). The Board believes that
natural hedges presently mitigate any exchange rate volatility risk for the Group to an economically acceptable level.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
The Group’s growth is expected to be supported by the continuing trend of schools, teachers, parents and students seeking
more engaging and interactive online learning resources with proven pedagogical efficacy.
The Group expects to continue to focus its product development and distribution efforts on the core areas of mathematics
and literacy. The Group also expects to continue to invest in its scalable internal sales and marketing to support its growth
in both existing and new territories.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
4
3P Learning Limited
Directors' report
30 June 2022
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Matthew Sandblom
Executive Chairman (appointed on 24 August 2021, effective on 25 August 2021)
previously Non-Executive Chairman (appointed on 28 May 2021)
BA Economics
Matthew is an education entrepreneur with over 30 years of experience building
successful companies. He started his first company, Pascal Press, in 1989 to publish
school workbooks and study guides. Since then he has founded or co-founded many
successful companies including Blake education, Clickview, 3P Learning and Blake
eLearning. Matthew is driven by the idea of producing resources for students that
deliver on the promise that they provide better ways to learn than other products. He
was a major shareholder of 3P Learning until its IPO in 2014 and is currently a major
shareholder of 3P Learning.
No other ASX listed entity
Other current directorships:
Former directorships (last 3 years): None
Interests in shares:
136,970,000
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Mark Lamont
Independent Non-Executive Director
BA., Dip Ed
Mark has deep experience in the global education and EdTech sectors with particular
expertise in internet applications, international markets and strategic planning.
Previously he held key executive roles at myinternet Limited and Follett Corporation
(USA).
No other ASX listed entity. Non-Executive Director of Education Services Australia
Limited since January 2017; Chair of EduGrowth Limited since January 2019; Chair of
Typsy Group Pty Ltd since October 2021.
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Member of the Audit and Risk Committee and Member of the People and Culture
Committee
None
Katherine Ostin
Non-Executive Director (appointed on 6 August 2021)
B.Com, GAICD, Chartered Accountant, F Fin
Katherine has diverse and deep experience in audit and risk management, having been
a senior audit partner at KPMG from 2005 to 2017 prior to her NED career since 2018.
Non-Executive Director of Capral Limited (ASX: CAA) since 17 June 2020; Non-
Executive Director of Dusk Group Ltd (ASX: DSK) since 16 September 2020; Non-
Executive Director of Alex Corporation Limited and Alex Bank Pty Ltd since February
2021.
Former directorships (last 3 years): Non-Executive Director of Swift Media Ltd (ASX: SW1) resigned on 18 November 2021
and Non-Executive Director of eftpos Payments Australia Ltd resigned on 4 February
2022.
Chair of the Audit and Risk Committee and Member of the People and Culture
Committee
None
Special responsibilities:
Interests in shares:
5
3P Learning Limited
Directors' report
30 June 2022
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Allan Brackin
Non-Executive Director (appointed on 6 August 2021)
Bachelor of Applied Science
Allan has over 35 years of experience in the technology industry and has a proven track
record as a business builder and adviser, with experience in business strategy, sales
and marketing, process re-engineering, change management, financial management
and merger and acquisition activity along with governance. Previously Allan was the
CEO and Managing Director of Volante Group Ltd, founder and CEO of AAG
Technology Services, Chair of Opticomm Ltd, and Chair of GBST Ltd.
Non-Executive Director of Sovereign Cloud Holdings Limited (ASX: SOV) since 16
October 2020 and Non-Executive Director of Integrated Research Limited (ASX: IRI)
since 1 February 2021.
Former directorships (last 3 years): Chair of GBST Holdings Limited (ASX: GBT) - delisted on 7 November 2019; Chair of
RPMGlobal Holdings Limited (ASX: RUL) - resigned on 30 June 2020; Chair of Sensera
Limited (ASX: SE1) - resigned on 20 October 2020 and Chair of OptiComm Ltd (ASX:
OPC) - delisted on 23 November 2020.
Member of the Audit and Risk Committee and Member of the People and Culture
Committee
222,895
Special responsibilities:
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Belinda Rowe
Non-Executive Director (appointed on 20 September 2021)
Bachelor of Arts Monash University, AFA (Advertising Federation Australia) Graduate,
GAICD
Belinda is a very experienced business leader and successful marketing executive. Her
extensive professional experiences lies in marketing communications, content, media
and digital marketing technologies. She led media and marketing communications
businesses for Zenith and Publics Media globally based in the UK, and held many
senior notes in the marketing industry, including as CEO of ZenithOptimedia for 10
years in Australia and as Director Brand & Marcoms for O2 Telefonica in the UK.
Non-Executive Director of HT&E Limited since 5 February 2019; Non-Executive
Director of Temple & Webster Group Ltd since 26 February 2021; Director of Soprano
Design Limited since September 2020 and Non-Executive Director of Sydney Swans
Limited since September 2021.
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Chair of the People and Culture Committee and Member of the Audit and Risk
Committee
None
Samuel Weiss (resigned on 17 September 2021)
Independent Non-Executive Director
AB, MS, FAICD
Significant experience as a Senior Executive and as a Non-Executive Director in
education, technology and consumer products companies in Australia, North America,
Europe and Asia.
Non-Executive Director of Altium Limited (ASX: ALU) - since January 2007
Other current directorships:
Former directorships (last 3 years): Non-Executive Director of Citadel Group Limited (ASX: CGL) - from 15 May 2019 to 31
Special responsibilities:
Interests in shares:
October 2019
Former Chair of the Audit and Risk Committee and former Member of the People and
Culture Committee
Not applicable as no longer a director
6
3P Learning Limited
Directors' report
30 June 2022
Name:
Title:
Qualifications:
Experience and expertise:
Claire Hatton (resigned on 24 September 2021)
Independent Non-Executive Director
BSc, MBA, GAICD
Over 20 years of global experience in strategy, sales, marketing and operations.
Significant experience in the digital and technology market. Previously held senior roles
at Google, Travelport and Zuji.com.
None during appointment period. Non-Executive Director of Tyro Payments Limited
(ASX: TYR) since January 2022 and Lifestyle Communities Ltd (ASX: LIC) since May
2022.
Former directorships (last 3 years): None
Special responsibilities:
Other current directorships:
Former Chair of the People and Culture Committee and former Member of the Audit
and Risk Committee
Not applicable as no longer a director
Interests in shares:
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretary
Elizabeth Wang (B. Com, LLB, GradDipACG, MAICD) is the company secretary and legal counsel since 16 July 2020.
Elizabeth is an experienced company secretary and lawyer and has held various similar positions in the listed space for the
past decade.
Joyce Li (BA Communications, LLB, LLM) was appointed as the joint company secretary with effect from 31 January 2022
and brings her experience working with listed companies and corporate governance.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the
year ended 30 June 2022, and the number of meetings attended by each director were:
Full Board
People and Culture
Committee
Attended
Held*
Attended
Held*
Audit and Risk Committee
Attended
Held*
Matthew Sandblom (1)
Mark Lamont
Katherine (Kathy) Ostin (2)
Allan Brackin (2)
Belinda Rowe (3)
Samuel Weiss (4)
Claire Hatton (5)
7
7
7
7
6
1
1
7
7
7
7
6
1
1
1
6
5
5
4
2
2
1
6
5
5
4
2
2
-
5
4
4
3
2
2
-
5
4
4
3
2
2
*
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
(1) Matthew Sandblom attended the People and Culture Committee meeting as an invitee.
(2)
Kathy Ostin and Allan Brackin started attending meetings from their appointment date on 6 August 2021.
Belinda Rowe started attending meetings from her appointment date on 20 September 2021.
Samuel Weiss resigned as a director of the Company and stepped down from his committee positions on 17 September
2021.
(3)
(4)
(5) Claire Hatton resigned as a director of the Company and stepped down from her committee positions on 24 September
2021.
Shares under option
There were no unissued ordinary shares of 3P Learning Limited under option outstanding at the date of this report.
7
3P Learning Limited
Directors' report
30 June 2022
Shares under performance and share appreciation rights
Unissued ordinary shares of 3P Learning Limited under performance and share appreciation rights at the date of this report
are as follows:
Grant date
21/12/2020
07/02/2022
03/06/2022
Vesting date
31/08/2023
31/08/2024
31/08/2024
Exercise
price
Share
appreciation
rights
$0.00
$0.00
$0.00
110,913
1,687,327
181,419
1,979,659
No person entitled to exercise the performance and share appreciation rights had or has any right by virtue of the performance
and share appreciation right to participate in any share issue of the Company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of 3P Learning Limited issued on the exercise of options during the year ended 30 June 2022
and up to the date of this report.
Shares issued on the exercise of performance and share appreciation rights
There were no ordinary shares of 3P Learning Limited issued on the exercise of performance and share appreciation rights
during the year ended 30 June 2022 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial
year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company against a
liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
Indemnity and insurance of auditor
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has
been made to indemnify Ernst & Young during the financial year and up to the date of this report.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable of $84,000 (2021: $12,875) to the auditor for non-audit services provided during the
financial year by the auditor are outlined in note 27 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 27 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional and
Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-
making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.
●
8
3P Learning Limited
Directors' report - remuneration report
30 June 2022
Letter from People and Culture Committee Chair
Dear Shareholder
On behalf of the board, it is my pleasure to present our Remuneration Report for the year ended 30 June 2022 (‘FY22’).
This year the Company reports on our completion of the integration of Blake eLearning, achieved through the dedication of
our executive leaders and the passionate individuals who form our diverse teams at 3P Learning.
The Board also recognises your support in the changes to Company’s corporate structure and the changes to the Company’s
non-executive directors.
In FY22 the People and Culture Committee (P&CC) saw the departure of Ms Claire Hatton (as prior Chairperson of the P&CC)
and Mr Samuel Weiss, and the introduction of Mr Allan Brackin, Ms Kathy Ostin and myself to this committee. In this
Remuneration Report you will find information about the changes that had been delivered by the prior P&CC committee in the
interests of Shareholders, and which have transitioned and will continue to be extended within the ongoing focus of this
committee.
Executive changes
Matthew Sandblom was appointed Executive Chairman effective 25 August 2021. This followed his initial appointment as
Chairman and Non-Executive Director following the merger with Blake eLearning on 28 May 2021, and was a change
determined by the Board to reflect his involvement in the day-to-day operations of the Company. As a substantial shareholder
of the Company, and due to commercial arrangements that pre-dated the merger, Mr Sandblom requested that he receive a
nominal fee of $1 in relation to his appointment. Alongside these changes, the Board confirmed the appointment of a non-
executive director as Senior Independent Director (Allan Brackin) to lead the Board in the absence of the Chair should a matter
that triggers a conflict need to be addressed by the Board.
During the year Jose Palmero formally transitioned from Interim CEO to CEO with no changes to his agreed fixed and variable
remuneration. This report sets out the performance outcomes to Jose’s annual short term incentive (‘STI’) cash payment with
an ‘at target; value equivalent of 50% of his fixed annual remuneration, and a long term incentive (‘LTI’) equity package with
an ‘at target’ value equivalent to 50% of his fixed annual remuneration.
Anton Clowes was appointed Chief Financial Officer on 26 April 2022 following the departure of Dimitri Aroney. Anton is
eligible for incentives under the FY22 STI and LTI arrangements on a pro-rata basis from the date of his appointment, and the
outcomes are noted in the report. Anton’s appointment followed a process overseen by the Board to identify the skills and
experience that would bring both the leadership and technical excellence required to support the Company’s growth and
strategic goals.
Board changes in FY22
Mr Samuel Weiss and Ms Claire Hatton resigned from the Board and its committees on 17 and 24 September 2021
respectively. The Company also confirmed the appointment of Mr Allan Brackin and Ms Kathy Ostin on 6 August 2021, and
myself from 20 September 2021, as independent non-executive directors.
The mandate for the appointments of the non-executive directors followed a review by the then P&CC to boost the Board
skillset considered valuable to the delivery of 3P’s strategy, goals and governance. The objective was to establish a board
with the mix of skills, experience and personal attributes to enable it to effectively fulfil its roles and responsibilities, and to
support the achievement of the strategic goals of 3P Learning.
The Board has considered our performance this financial year and reflected on our delivery of strategic impact and oversight
for the Company and its shareholders. As a Board, we access the significant knowledge in education, education pedagogy
and education technology of Matthew Sandblom as Executive Chairman, and Mark Lamont as independent non-executive
director. Allan Brackin brings his experience as a seasoned director with over 35 years’ experience in building revenue growth
and market value in private and public companies in the technology sector. Kathy complements the Board with her strong
financial, audit and risk advisory background and experience in delivering outcomes in a broad sector of industries. My
contribution brings executive and board experience in international marketing, communication, media and digital businesses.
The Board’s insight gained in FY22 confirms our belief that the contribution of each director will continue to support and drive
the success of 3P Learning in FY23 and beyond.
9
3P Learning Limited
Directors' report - remuneration report
30 June 2022
Remuneration Strategy
Our key focus area for FY22 has been the alignment of 3P Learning’s remuneration and incentive model as a newly integrated
business, in order to support our strategic goals. Our model needs to enable our business objectives, deliver shareholder
returns and ensure we are offering competitive remuneration packages to attract and retain talented executives.
The changes that were implemented in FY22 incorporated the following:
The addition of Business Expansion, and People & Culture KPIs, to the Short-Term Incentive Plan for Executives, as well as
an individual
performance component for our broader employee base. These components are in addition to the achievement of defined
Revenue and EBITDA targets; and
The introduction of share appreciation rights as the instrument underpinning our Executive Long Term Incentive Plan. These
reward the Executive on the cumulative performance achievements of the Company over a three-year period. The measures
of the LTI Plan remain unchanged, namely Revenue and EPS.
In addition, the vesting conditions for the performance rights issued under the FY20 and FY21 LTI Equity Incentive Plans were
also reviewed this year in accordance with the plan rules. The Board considered the original vesting targets and hurdles for
revenue and earnings per share targets, which had been set in FY20, and utilised its discretion to adjust the hurdles having
regard to the merger and integration of Blake eLearning.
As we move into FY23, it is our intention to retain the current design of the FY22 STI and LTI Plans, and to place an increased
focus on developing a further scheme that encourages greater share ownership by a broader cohort of 3P talent. We will also
continue to build on our remuneration strategy where we identify improvements and additions that can be made to further
drive high performance.
Our Company Purpose and Values
One of our key focus areas for this integration year has been the development and launch of our company purpose “Better
Ways To Learn”, and a refreshed set of company values. These were developed from the “ground up” and included
stakeholders representing our Board, leadership team and customers, and most importantly, 120 of our people from around
the world. Our values ‘Create Lifelong Learners”, “Make It Happen”, “Find Better Ways”, “Be Authentic” and “Thrive Together”
strongly resonate with our people and reflect how we work every day at 3P Learning. They also reflect what our many
stakeholders experience and expect when working with us.
We look forward to continuing to build our purpose and values into everything that we do in FY23.
Diversity and Inclusion
Embracing diversity and inclusion is also central to how we work and how we seek to create “Better Ways To Learn” at 3P
Learning. We believe that the more perspectives we are open to, the more that our company and our product can thrive. This
is also at the heart of our new company value “Be Authentic”.
Since 2017, the Board has set the target of 50% gender diversity at the Board level, the senior leadership team level, as well
as across the organisation globally. At an aggregated level, women comprised 58% of our employees globally as at 30 June
2022. At the Board level, 40% of directors were female. At the senior leadership team level, 56% were women and 44% are
men respectively, which has increased from 50% female representation in the previous year. This is a result that we are very
proud of and one that we will continue to champion in FY23.
Our Change Journey
At the time of the merger in late FY21, we set out a three-stage change plan. Stage1, Resolve Uncertainty, which was our first
critical priority and this underpinned much of the restructuring work that was required in the early days. Stage 2, Rebuild
Energy and Momentum, followed this as we brought the two companies together culturally through a range of initiatives, and
focussed our sights squarely on the future. Stage 3, Ramp Up High Performance, is now well advanced and is our key focus
area in FY23.
The genuine commitment and dedication shown by our people has been exceptional during FY22 and has provided an
important foundation for strong company performance this year. This achievement should not be understated, considering
this integration was largely completed during the global pandemic, where face to face contact was limited for many months.
We look forward to further building on this achievement in FY23.
10
3P Learning Limited
Directors' report - remuneration report
30 June 2022
Our people will be the key to the achievement of our ambitious and exciting strategic goals in the year, and years ahead. We
have a clearly defined people and culture strategy that guides our focus and we have a keen eye on attracting and retaining
the great talent that we need to deliver strong outcomes for our investors. In FY23, we will also build on an exciting program
of work that we have commenced around “Giving Back” which a key pillar of our ESG agenda. I look forward to updating you
on this in due course.
We are excited about the year ahead, and again, we thank you for your continued support of 3P Learning.
__________________________
Belinda Rowe
Chair of People & Culture Committee
22 August 2022
Sydney
11
3P Learning Limited
Directors' report - remuneration report
30 June 2022
Remuneration report (audited)
The Directors of 3P Learning Limited present the Remuneration Report (the Report) for the Company and its controlled
entities for the year ended 30 June 2022 (the Group). This Report forms part of the Directors’ Report and has been audited
in accordance with section 300A of the Corporations Act 2001.
The Report details the remuneration arrangements for the Company’s key management personnel (KMP) comprised of:
• Non-executive directors (NEDs)
• Executive director and certain senior executives (collectively the Executives).
Overview
Section
1
2
3
4
5
6
7
8
Key management personnel changes
Overview of executive remuneration
Performance and executive remuneration outcomes in FY22
Non-executive directors’ remuneration
Service Agreements
Share-based compensation
Additional disclosures relating to key management personnel
Other transactions with KMP and their related parties
1. Key management personnel (KMP) Changes
The KMP of the Group are those persons who, directly or indirectly, have authority and responsibility for planning, directing
and controlling the major activities of the Company and Group. The table below outlines the KMP of the Group and their
movements during the financial year.
Name
Non-Executive Directors
Mark Lamont
Allan Brackin
Katherine Ostin
Belinda Rowe
Sam Weiss
Claire Hatton
Executive Director
Matthew Sandblom
Other KMP
Jose Palmero
Anton Clowes
Former KMP
Dimitri Aroney
Position
Term as KMP
Non-executive Director
Non-executive Director(i)
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Executive Chairman(ii)
Full financial year
Appointed 6 August 2021
Appointed 6 August 2021
Appointed 20 September 2021
Ceased on 17 September 2021
Ceased on 24 September 2021
financial year
Full
(Appointed as
Executive Chairman effective 25 August
2021)
Chief Executive Officer (CEO)(iii)
Chief Financial Officer
Full financial year
Appointed 26 April 2022
Chief Financial Officer
Ceased on 26 April 2022(iv)
(i) On appointment of an Executive Chairman, the non-executive directors nominated and appointed Allan Brackin as Senior Independent Director.
(ii) Matthew Sandblom served as Non-Executive Chairman between 28 May 2021 to 24 August 2021 after which he was appointed Executive Chairman effective 25 August 2021.
(iii) Jose Palmero was appointed interim CEO on 28 May 2021 upon the completion of the Blake eLearning acquisition. On 24 August 2021, the Board waived the interim period
and effective 25 August 2021, Jose was appointed CEO on an ongoing basis.
(iv) Dimitri Aroney ceased to be a member of KMP effective 26 April 2022 and ceased employment on 1 July 2022.
Following the review and nomination processes applied by the People and Culture Committee (P&CC) and the Board, the
Company welcomed the appointments of non-executive directors Allan Brackin and Katherine (Kathy) Ostin on 6 August 2021,
and Belinda Rowe on 20 September 2021. These appointments were confirmed in annual general meeting with shareholders
in November 2021. The Company also acknowledged the contributions of Sam Weiss and Claire Hatton during the year and
prior to their cessation as KMP in September 2021.
In relation to the executive KMP, Jose Palmero transitioned from serving under his appointment as interim CEO following the
Blake eLearning acquisition in May 2021 to be appointed CEO on 25 August 2021. Anton Clowes was appointed as Chief
Financial Officer (CFO) on 26 April 2022, and Dimitri Aroney ceased to be a member of KMP effective 26 April 2022.
12
3P Learning Limited
Directors' report - remuneration report
30 June 2022
The focus of this report is on the remuneration arrangements and outcomes for the KMP listed in the table above. It also
outlines information about the remuneration policy and arrangements for the Group’s senior executive team more broadly.
2. Overview of executive remuneration
Overview of 3P Learning remuneration policy and structures
The People and Culture Committee (P&CC) is responsible for developing, reviewing, making recommendations and providing
assistance and advice to, the Board on the remuneration arrangements for the Company’s directors, its executives and in
relation to key employment policies and practices. The performance of the Group depends on the quality of its directors and
senior executives.
The Company’s remuneration philosophy is to attract, retain and motivate exceptional performance and high-quality talent.
The Group's executive reward framework is based on objectives to:
•
•
align senior executive rewards with achievement of strategic objectives and the delivery of shareholder value;
provide competitive remuneration packages that recognise both individual and organisational performance.
alignment to long term value creation
fairness for all stakeholders
simple to understand and administer
The remuneration framework, and any potential changes to that framework, are assessed on the following guiding principles:
•
•
•
• motivating to executives
•
encouraging of executive ownership and accountability to the Company and its stakeholders.
The P&CC and the Board have structured an executive remuneration framework that is market competitive, is designed to
retain and motivate the Company’s leadership team and sets a standard for transparency and good corporate governance.
The determination of non-executive director and executive remuneration is separately addressed below.
During the Period the P&CC considered the FY22 Long Term Incentive grants. The appropriate long-term incentives and
performance targets were considered by the P&CC and Board for the leadership team comprised of the CEO, CFO and non-
KMP executives for the next phase of the Company.
External remuneration consultants (Ernst & Young) were engaged by the Company during the reporting period to provide
advice that was independent and free from undue influence from any KMP, in relation to the general design and
implementation of the Company’s FY22 Long Term Incentive offer. The consultant did not make any remuneration
recommendations in relation to any KMP. The Company also engaged external advisors to advise on the valuations of the
share-based payments and tax related matters. The total incurred cost for remuneration-related advice throughout the financial
period was $40,150.
Our executive remuneration policy and structures
In light of the Group’s remuneration philosophy, the Board considers the measures and levels of fixed remuneration and
variable remuneration consisting of short-and long-term incentives. Review of executive remuneration levels are conducted
annually by the P&CC and agreed by the Board to determine the optimal mix between fixed and ‘at risk’ incentive components
for the CEO. The remuneration of other the executive KMP is reviewed with input from the P&CC and Board by the CEO, and
approved by the Board.
For the period from 25 August 2021, Matthew Sandblom was appointed Executive Chairman and entered a services
agreement with a term of 12 months for his services as KMP. The remuneration is capped annually to $100,000 and does not
contain any variable STI or LTI remuneration. Any remuneration arrangements with the Executive Chairman under his services
agreement are reviewed by the P&CC and agreed by the Board (excluding the Executive Chairman). As no STI or LTI
remuneration is payable, the following sections on remuneration for executive KMP do not apply to the Executive Chairman.
13
3P Learning Limited
Directors' report - remuneration report
30 June 2022
Details for each of the individual components for remuneration for other executive KMP in both FY21 and FY22 were as
follows:
Fixed
Variable or ‘At Risk’ Performance Based
Remuneration
Structure
Fixed remuneration
Attracts and retains high
performance talent
Short term incentive (STI)
Rewards current year performance
FY2021
FY2022
•
•
Fixed salary set by
reference to
appropriate
benchmark
information and
experience of
individuals
Includes
superannuation and
salary-sacrifice non-
monetary benefits
•
•
25 - 50% of fixed remuneration
at target STI
Increased focus on revenue
growth
• Weighting of group
performance targets:
- revenue (70%);
- underlying EBITDA (30%)
•
•
25 - 50% of fixed remuneration
at target STI
Increased focus on revenue
growth, business expansion
and people leadership
• Weighting of group
performance targets:
- revenue (up to 40%);
- underlying EBITDA targets
(up to 40%)
- functional achievements of
business expansion, and
people and culture KPIs
(20%)
Long term incentive (LTI)
Rewards longer term sustainable
performance
•
25 - 50% of fixed
remuneration at target LTI
• Grant of performance rights
•
Encourage greater
executive ownership of the
Company
•
25 - 50% of fixed
remuneration at target LTI
• Grant of share appreciation
•
rights
Encourage greater
executive ownership of the
Company, strengthen
alignment with long-term
growth of the Company
Elements of executive remuneration
Fixed remuneration
The fixed remuneration component consists of base salary, superannuation and other non-monetary benefits and is designed
to reward the Executive’s scope of their role and responsibilities, their skills, experience and qualification and individual and
group performance.
Remuneration of KMP is determined or reviewed with reference to available market data including benchmarks to comparable
roles in similar companies and is reviewed annually by the P&CC.
The fixed remuneration for the CEO is reviewed annually by the P&CC and following consideration of performance against
annual key performance indicators set at the start of the financial period. Any changes to CEO fixed remuneration requires
Board approval. The fixed remuneration of KMP reporting to the CEO is reviewed by the CEO on consultation with the P&CC,
and approved by the Board.
Performance based remuneration
The ‘at risk’ performance-based remuneration components for eligible Executives align reward with the achievement of annual
and longer-term objectives of the Group, and the optimisation of shareholder value over the short and long term.
Short-Term Incentive
The Short-Term Incentive (STI) plan provides eligible Executives with the opportunity to earn an annual incentive award which
is delivered in cash. The key objectives of the STI program are to drive and reward outstanding performance against annual
strategic financial and operational performance objectives, promote effective management of capital and position the
Company to continuously achieve in future years.
How is it paid?
100% of an STI award is paid in cash after the assessment of annual performance.
How much can an eligible Executive
earn?
Eligible Executives have a target STI opportunity of up to 25% of fixed remuneration
while the CEO has a target STI opportunity of up to 50% of fixed remuneration.
14
3P Learning Limited
Directors' report - remuneration report
30 June 2022
The FY22 Target STI is designed to deliver strong and sustainable performance and
growth by motivating talent and rewarding performance. Participants have the
opportunity to earn up to 100% of the STI target for achieving the target under each
key performance indicators (KPI).
For performance that significantly exceeds targets, the Board and CEO may consider
discretions to increase the target award above 100%. The Board retains the
discretions to adjust STI outcomes up or down to reflect the achievement of results
consistent with strategic priorities and alignment with shareholder value.
In comparison, the STI program in FY21 similarly focused on sustainable performance
and continuing growth by retaining talent and rewarding performance.
How is performance measured?
The financial performance measures that are set for eligible Executives are based on
a range of profit, revenue and business expansion or people leadership targets.
For the current year the Board considers the financial measures to be appropriate as
they are aligned with the Group’s objective of delivering profitable growth and
improved shareholder returns. The inclusion of business expansion and people
leadership targets also provide focus on the delivery of integration and business plans
aligned to initiatives that build and sustain longer term shareholder returns.
In comparison, the FY21 performance measures were solely linked to profit and
revenue growth. The weighting of the performance measures was based on the
financial performance objectives in place at the beginning of that year.
A summary of the performance measures and weightings in the two prior years are
as follows to highlight these changes:
Revenue Underlying
EBITDA
Business
Expansion
CEO
KMP
Non-KMP
executives
2022
2021
2022
2021
2022
2022
2021
30%
70%
40%
70%
40%
-
70%
30%
30%
40%
30%
40%
-
30%
20%
-
-
-
-
100%^
-
People
&
Culture
20%
-
20%
-
20%
-
-
^In 2022, performance measures for certain non-KMP executives consist of a range
of business targets developed to align with their responsibilities.
If the participant commenced their role within the financial year, any STI payment that
is made will be a pro-rata basis based on their commencement date.
The STI award is determined after the release of the Company’s full financial year
results in August following a review of performance over the year against the STI
financial and non-financial performance measures by the CEO (and in the case of the
CEO, by the Board).
The Board approves the final STI award based on this assessment of performance.
The STI award is wholly paid in cash within 4 months after the end of the performance
period.
When is it paid?
Deferral terms
Payment of STI is not deferred.
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3P Learning Limited
Directors' report - remuneration report
30 June 2022
Long-Term Incentive
The objective of the Long-Term Incentive (LTI) Plan is to link the long-term reward for KMP and non-KMP executives to the
creation of shareholder value through the allocation of an equity award which are subject to specific performance conditions.
In FY22 the Board reviewed the LTI Plans in place and engaged remuneration consultants to consider the equity instruments
that would achieve the objectives of aligning exceptional performance with medium to long term growth and shareholder value.
Among the factors considered by the Company was the focus on the strategic goals that will follow on from the integration of
Blake eLearning, and the appropriate measures and incentive to drive performance and execution of these strategic goals
over that longer term. When setting the opportunity to be awarded shares in accordance with the remuneration policy, the
Board considered that the combination of the vesting conditions that would align the performance objectives of the Company
for growth and shareholder value, while balancing the terms that would attract, motivate and reward talented executives for
performance over the performance period. The 3P Learning Equity Incentive Plan Rules were updated to clarify terms for the
issue of Share Appreciation Rights as an Award (defined under the Rules).
How is it paid?
The 3P Learning Equity Incentive Plan Rules (Rules) and the vesting conditions will
determine the number of rights that vest, and how the incentive is paid, to eligible
executives.
During the current year, eligible executives were granted Share Appreciation Rights
(SAR), while in prior years performance rights had been granted. Subject to the
Rules, and in circumstances where the relevant vesting conditions are met:
•
•
in relation to SARs, the eligible executive can exercise their vested SARs during
the Exercise Period to be allocated Company shares, and
in relation to Performance rights, the relevant number of ordinary shares will be
issued to eligible executives.
How much can an eligible Executive
earn?
The eligible executive has a target LTI opportunity of up to 25% of fixed remuneration
while the CEO has a target LTI opportunity of up to 50% of fixed remuneration.
How is performance measured?
In relation to SARs, the number of rights issued was calculated by dividing the dollar
value of LTI award opportunity by the value per share appreciation right and was
determined by an independent valuer.
If the participant commenced their role within the financial year, the LTI opportunity
is calculated on a pro-rata based on their commencement date.
Historically, all grants of Awards under the LTI Plan have been weighted equally
between revenue and Earnings Per Share (EPS) targets and generally had a three-
year vesting (performance) period. The Board considers the combination of revenue
and EPS thresholds an appropriate balance to ensure that ‘top line’ growth is pursued
over the medium to long term, whilst growth in earnings and a focus on shareholder
value is maintained.
During the current year, the Board granted SARs with performance measures based
on the aggregate performance over the 3-year performance period. The Board
considered that using the aggregate performance period (rather than measuring
performance in the third year) would engage the desired focus on growing
shareholder value over the period, and in the fast-changing environment of education
technology.
The EPS and revenue measures for the SARs are based on:
•
Aggregate EPS measures over the three-year period of FY22, FY23 and FY24
period (50% weighting)
the Company’s aggregate revenue over the three-year period of FY22, FY23 and
FY24 (50% weighting)
•
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3P Learning Limited
Directors' report - remuneration report
30 June 2022
The proportion of SARs that may be awarded on the Company’s performance over
the three-year period is determined based on the following:
Performance level
% of Target incentive awarded
Below threshold
Between Threshold and Target
Target
Between Target and Maximum
Maximum
Nil
Between 50% and 100%*
100%
Between 100% and 120%*
120%
*Straight line vesting applies between these performance levels.
These arrangements differ to the measures for the Performance Rights issued in prior
LTI Plans.
Under the FY21 LTI Plan, the Board considered a combination of EPS and revenue
thresholds that may be awarded at Threshold (80%), Target (100%) or Stretch
(150%). The number of performance rights awarded is calculated by dividing the
dollar value of LTI award opportunity by the value per right. The value per right is
determined on a face value basis using a twenty-day VWAP.
Awards granted under the LTI plan will only vest upon satisfaction of certain vesting
conditions that are defined by the Board. The performance measures against each
vesting condition are assessed by the Board following the relevant full financial year
at the end of the performance period.
In relation to SARs, subject to the Plan and once vesting conditions are met, the rights
are vested. Executives can elect to exercise any vested SARs during their exercise
period to be issued shares in the Company. The exercise period for the SARs is within
five years of the original grant date. The value of the shares allocated is based on the
number of rights validly exercised multiplied by the difference between the Market
Price of the shares at the date of exercise and the notional exercise price ($1.35).
Shares are issued within 30 days following the exercise date.
Under prior LTI Plans, the Performance Rights have a 3-year vesting
(performance) period. Once the Performance Rights vest, and subject to the terms
of the plan, the Company will issue or allocate the performance rights to the
Executives.
Any SARs or Performance Rights which do not meet their vesting conditions at the
end of the performance period will lapse.
Any shares issued in accordance with the rights issued under the Plan as described
above, will rank equally in all respects with other ordinary shares in the Company
(except in regard to any rights attaching to such other Shares by reference to a
record date prior to the date of their allocation or transfer).
SARs will vest at the end of the three-year performance period subject to vesting
conditions, and the eligible Executive may exercise vested SARs during the exercise
period.
All Performance Rights will vest at the end of the three-year vesting period subject to
certain vesting conditions being met.
If an eligible executive ceases to be an employee of the Company before the vesting
date of the SAR or Performance Right by reason of resignation, dismissal, or any
other circumstance determined by the Board to be ‘Bad Leaver’, all the unvested
rights lapse on the date of cessation.
17
When is it paid?
Deferral terms
What happens if an eligible
executive leaves?
3P Learning Limited
Directors' report - remuneration report
30 June 2022
Is there a clawback provision?
If an eligible executive ceases to be an employee of the Company before the SARs
or Performance Rights vest for any reason other than as a Bad Leaver (which may
include redundancy, retirement, death or total and permanent disability), the Board
may, in its discretion, determine that all or a portion of the relevant rights vest
immediately or at some future time. If the Board does not make a determination, the
relevant SARs or Performance Rights will remain on-foot, and are tested and vest on
the original vesting date to the extent that the applicable vesting conditions have been
met.
Yes. SARs and Performance Rights may also be forfeited if a ‘claw back’ event occurs
during the performance period. A claw back event includes circumstances where an
executive has engaged in fraud, dishonesty or gross misconduct, where the financial
results that led to the equity award are subsequently shown to be materially
misstated, or where the behaviour of a senior executive brings the Company into
disrepute or impacts the Company’s long term financial strength.
What happens if there is a change
of control?
Where a change of control event occurs prior to the SARs or Performance Rights
vesting, the Board may, in its discretion, determine whether all or a number of those
rights lapse at the time of the change of control event or at a future point in time, or
vest at the time of the change of control event or at a future point in time.
Are eligible Executives entitled to
dividends?
Performance Rights and SARs do not carry a right to vote or to dividends or, in
general, a right to participate in other corporate actions such as bonus issues.
3. Performance and executive remuneration outcomes in FY22
The actual remuneration earned by executives in FY22 against the prior year is set out below. This provides shareholders
with a view of the remuneration actually paid to executives for performance in FY22 and the value of the LTIs that vested
during the period.
Overview of company performance
The table below shows the Group’s performance history, the Company’s share price and the effect on shareholder value over
the past five financial years. Those results are not fully comparable due to changes in accounting standards and associated
change of accounting policy over that period. Results from FY19 and FY20 are restated due to change of accounting policy
regarding customisation and configuration costs incurred in relation to Software-as-a-Service arrangements. These
arrangements which were previously capitalised were restated and recognised as an expense in profit or loss. AASB 16
‘Leases’ was adopted on 1 July 2019 and effective for the FY20 year, and as such, results from FY18 to FY19 are not prepared
on the same basis.
Financial Year
Revenue ($m)
Underlying EBITDA ($m)(i)
Statutory EPS (cents)
Share Price ($) 30 June
2018
55.4
19.6
(13.42)
1.25
2019
54.4
12.5(ii)
1.69
0.98
2020
55.0
9.5
0.37
0.86
2021
57.4
9.4
(6.15)
1.31
2022
97.2
13.8
(0.19)
1.24
(i) Underlying EBITDA represents earnings before interest, tax, depreciation and amortisation, excluding corporate advisory, restructure and integration costs specifically
associated with the acquisition of Blake eLearning Pty Ltd and costs associated with the buyback of distribution rights.
In this reporting period the result is the same as Statutory EBITDA.
(ii)
18
3P Learning Limited
Directors' report - remuneration report
30 June 2022
Executive remuneration
Details of statutory remuneration (Australian Accounting Standards (‘AAS’)) for Executive KMP, for the years ended 30 June
2022 and 30 June 2021, are set out below:
Salary
$
Cash
STI(i)
$
Post-
employment
benefits
(Super-
annulation)
Accounting
value of LTI
awards and
additional
incentives
Other(ii)
Termination
Payments
Other long-
term
benefit(ii)
$
$
$
$
%
Total
$
Performance
Related
Equity
Based
%
%
Current Executive KMP
M Sandblom (Executive Chairman) (iii)
2022
2021
1
-
-
-
-
-
-
-
-
-
-
J Palmero (Chief Executive Officer)(iv)
2022
2021
573,214
210,000
25,145
23,568
134,402
43,715
-
33,900
1,964
-
A Clowes (Chief Financial Officer)(v)
58,712
15,822
4,486
4,583
3,501
-
-
-
Former Executive KMP
R O’Flaherty (Former Chief Executive Officer)(vi)
-
-
-
-
-
-
-
2022
2021
2022
2021
-
-
-
-
-
-
-
-
-
1
-
-
-
-
-
11,833
36,998
978,162
116,577
35%
14%
-
-
-
-
-
-
87,104
22%
4%
-
-
-
-
-
-
1,441,957
13%
(9%)
594,551
325,000(vii)
(21,342)
25,000
(131,252)
650,000(viii)
D Aroney (Former Chief Financial Officer)(ix)
2022
2021
218,059
(3,733)
6,774
24,825
222,092(x)
265,684
28,865(xi)
20,421
24,957
77,908(x)
-
-
(22,417)
445,600
(5%)
(4%)
7,717
425,552
11%
5%
(i) Cash STI is physically paid after the end of the financial year to which it relates but is allocated to the earning year.
(ii) Represents the net movement of annual leave and long service leave entitlement respectively.
(iii) Matthew Sandblom was appointed Non-Executive Chairman from 28 May 2021 to 24 August 2021, and executive Chairman effective from 25 August 2021. Matthew receives
fees for service under a consultancy services agreement.
(iv) Jose Palmero was appointed CEO on 25 August 2021. This followed his appointment as interim CEO between 28 May 2021 and 24 August 2021.
(v) Anton Clowes became a member of KMP effective 26 April 2022.
(vi) Rebekah O’Flaherty resigned as Managing Director and CEO on 9 April 2021. She remained with the Company until 10 June 2021 to assist with the integration following the
acquisition of Blake eLearning. Rebekah’s existing LTI entitlements remain on foot and will be tested in accordance with the LTI plan.
(vii) In accordance with her executive service agreement at the time, Rebekah O’Flaherty received $325,000, being the value of her unpaid award under the Company’s short term
incentive plan as a result of the Scheme Meeting being convened in relation to IXL Learning Inc. on 20 November 2021.
(viii) Termination benefit included in lieu of notice.
(ix) Dimitri Aroney ceased to be a member of KMP effective 26 April 2022 and ceased employment on 1 July 2022.
(x)
(xi) $28,865 was accrued for Dimitri Aroney in relation to his potential FY21 STI award.
Includes pro-rata of retention incentive of $241,251 (FY21 $58,749) and decrease in accounting value of LTI awards of $19,159 (FY21 increase $19,159).
19
$
1
-
596,782
45,679
63,295
-
-
3P Learning Limited
Directors' report - remuneration report
30 June 2022
In line with general market practice a (non-AAS) presentation of pay with respect to the FY22 and FY21 reporting periods are
provided in the table below, to give shareholders a more informative picture of actual remuneration outcomes that have vested
within the financial year.
Post-
employment
benefits
(Super-
annuation)
LTI and
additional
incentives
vested
Termination
Payments
Total Remuneration
$
$
Salary
Cash STI
$
Current Executive KMP
M Sandblom (Executive Chairman)
2022
2021
1(i)
-
J Palmero (Chief Executive Officer)
2022
2021
573,214
43,715
A Clowes (Chief Financial Officer)(ii)
2022
2021
58,712
-
Former Executive KMP
$
-
-
-
-
-
-
$
-
-
23,568
1,964
4,583
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
R O’Flaherty (Former Chief Executive Officer)(iii)
-
-
2022
2021
787,821
325,000(iv)
25,000
650,000(v)
1,787,821
D Aroney (Former Chief Financial Officer)(vi)
2022
2021
218,059
265,684
25,132
24,825
240,000(vii)
-
24,957
-
-
-
508,016
290,641
(i) Matthew Sandblom receives fees for service under a consultancy services agreement.
(ii) Anton Clowes became a member of KMP effective 26 April 2022.
(iii) Rebekah O’Flaherty resigned as Managing Director and CEO on 9 April 2021. She remained with the Company until 10 June 2021 to assist with the integration following the
acquisition of Blake eLearning. Rebekah’s existing LTI entitlements remain on foot and will be tested in accordance with the LTI plan.
(iv) In accordance with her executive service agreement at the time, Rebekah O’Flaherty received $325,000, being the value of her unpaid award under the Company’s short term
incentive plan as a result of the Scheme Meeting being convened in relation to IXL Learning Inc. on 20 November 2021.
(v) Termination benefit included in lieu of notice.
(vi) Dimitri Aroney ceased to be a member of KMP effective 26 April 2022 and ceased employment on 1 July 2022.
(vii) Payment reflects the component of the $300,000 retention payment awarded in FY21 that was paid during FY22. The remaining $60,000 was paid in FY23.
20
3P Learning Limited
Directors' report - remuneration report
30 June 2022
Short term incentives
STI for the 2022 financial year
The target STI opportunity for the financial year ended 30 June 2022 was an amount equal to 25% for eligible Executives’
fixed remuneration and 50% in the case of the CEO.
Who are the participants of the STI?
The CEO and CFOs are members of KMP to participate in the STI Program for FY22. As at 30 June 2022 there were four
other non-KMP level senior executives that were also participants, bringing the total number of senior executive participants
to 6. The STI remuneration for Dimitri Aroney included the amount paid during the year out of the total retention bonus of
$300,000 awarded in FY21.
Specific information relating to the STI component to the CEO and CFOs for FY22 is set out below.
Executive KMP
Position/Title
Jose Palmero
Anton Clowes
Dimitri Aroney(ii)
CEO
CFO
Former CFO
Actual STI
payment
-
-
-
Retention
payment(i)
-
-
240,000
Accrued STI
payment
210,000
15,822
-
% of Target STI
Payable
80%
100%
0%
(i) This payment reflects the component of the $300,000 retention payment awarded in FY21 that was paid during the reporting period. The remaining $60,000 was paid in FY23.
(ii) Dimitri Aroney ceased to be a member of KMP effective 26 April 2022 and the percentage of the Target STI is based on the STI Plan excluding the retention bonus.
CEO Performance measure
FY22 – At Target
FY22 Performance
Revenue
Underlying EBITDA(ii)
Business expansion
People and Culture
$94.8m
$13.8m
New business targets
People and Culture
measures(iii)
$97.2m
$13.8m
Not met
Met
CFO Performance measure
FY22 – At Target
FY22 Performance
Revenue
Underlying EBITDA(ii)
People and Culture
$94.8m
$13.8m
People and Culture
measures(iii)
$97.2m
$13.8m
(Board discretion)
% of Target
Incentive Award(i)
30%
30%
0%
20%
Weighting
30%
30%
20%
20%
% of Target
Incentive Award(i)
40%
40%
20%
Weighting
40%
40%
20%
(i) This is based on the metrics outlined under ‘How much can an eligible Executive earn?‘ earlier in this report and pro-rated for that portion of the reporting period that the
relevant executive was employed.
(ii) Underlying EBITDA represents earnings before interest, tax, depreciation and amortisation, excluding corporate advisory, restructure and integration costs specifically
associated with the acquisition of Blake eLearning Pty Ltd and costs associated with the buyback of distribution rights.
(iii) The People and Culture targets reflected measures to focus executives on company culture and employee engagement outcomes. The measures are selected based on
improving % ratings on key engagement criteria from internal surveys periodically used by the Company to gather feedback from employees. The data and feedback collated
through the survey enabled performance to be measurable, and discretion may be applied by the Board following a review of specific activities and performance for the
executive. The heightened focus on engagement was an important part of leading Company outcomes in an environment of significant integration activities during the year.
21
3P Learning Limited
Directors' report - remuneration report
30 June 2022
Long term incentives
Who are the participants of the LTI?
The CEO and other C-level senior executives are eligible to participate in the LTI plan. As at 30 June 2022 there are 6
participants.
The former Managing Director and CEO, Rebekah O’Flaherty whose appointment ceased on 9 April 2021 is a participant. In
FY21 the Board had determined that Rebekah’s cessation of employment constituted a ‘good leaver’ and that her long-term
incentive arrangements which existed prior to her termination remained on-foot and would be tested in accordance with the
plan.
The participation of the former CFO Dimitri Aroney (who ceased to be a member of KMP on 26 April 2022) ended on 1 July
2022 following the cessation of his employment and his long-term incentive arrangements ceased on the same date.
Performance conditions and disclosure of targets
The publication of prospective Revenue and EPS targets for future performance periods would require the disclosure of
commercially sensitive information. Accordingly, the Company will not disclose prospective targets but will disclose historic
targets and the Company’s performance against those targets. The hurdles for the SARs granted in FY22 will be disclosed in
August 2024 after the applicable performance period.
2020 LTI Award – Performance condition outcomes based on FY22 results
The grant of Performance Rights under the Company’s LTI plan was made in FY20, with performance conditions to be tested
with respect to the audited FY22 full year results.
The defined EPS and Group Revenue performance measures each account for 50% of the potential award of Performance
Rights. In accordance with the LTI arrangement, the Board exercised its discretion to adjust the revenue vesting condition
having regard to:
•
•
the remuneration philosophy of the Company and
the acquisition of Blake on 28 May 2021 which has had a significant growth impact on the Company.
The outcomes for the relevant Group Revenue and EPS targets were assessed. Based on the financial results for FY22, no
LTI Awards vested during the reporting period and the following outcomes are expected for LTI grants awarded in FY20:
Performance measure
Revenue
EPS
FY22
At Target
$118.5m(i)
$0.077
FY22
Performance
Outcome
% of Target
Incentive Awarded
Weighting
$97.2m
($0.19)
Below threshold
Below Threshold
0%
0%
50%
50%
(i) The FY20 LTI plan was approved by shareholders in October 2019 in relation to KMP. The FY22 performance hurdles were then established with a Revenue Target of
$82.3m, and following the events of the merger with Blake eLearning, this was revised in August 2022 to take into account those events.
The former CEO and one non-KMP executive were the only executives that held FY20 LTI awards. As a result of the FY22
performance thresholds not being reached, the relevant performance rights under the FY20 LTI plan will lapse in August 2022.
Additional payments awarded in FY22
No additional payments were awarded in FY22 to executive KMP.
4. Non-executive directors' remuneration
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the
directors. Non-executive directors have not been granted or issued equity as part of their remuneration. To preserve
independence and impartiality, non-executive directors do not receive performance related compensation and are not eligible
to participate in the Company’s equity incentive plan.
Non-executive directors' fees and payments are reviewed annually by the P&CC.
ASX listing rules require the aggregate non-executive directors’ remuneration be determined periodically by a general meeting.
The most recent determination was in 2017 when shareholders set the aggregate remuneration at $900,000 per annum. Board
and committee fees, as well as statutory superannuation contributions made on behalf of the non-executive directors, are
included in the aggregate fee pool.
22
3P Learning Limited
Directors' report - remuneration report
30 June 2022
The table below shows the structure and level of non-executive director fees (exclusive of superannuation) for the financial
years ended 30 June 2022 and 30 June 2021.
Fee applicable
Board
Audit and Risk Committee
People and Culture Committee
FY
2022
2021
2022
2021
2022
2021
Chair ($)
Member ($)
185,000
185,000
20,000
20,000
20,000
20,000
95,000
95,000
10,000
10,000
10,000
10,000
As at 30 June 2022, the Company has an Executive Chairman of the Board. Matthew Sandblom served as Non-Executive
Chairman from 28 May 2021 to 24 August 2021, and was subsequently appointed as Executive Chairman on 25 August 2021.
During his appointment as Non-Executive Chairman, Matthew requested that he receive a nominal fee of $1.
Non-executive director remuneration in 2021 and 2022
Details of the remuneration for the independent non-executive directors for the financial years ended 30 June 2022 and 30
June 2021 are set out in the table below.
Name
Current non-executive directors
M Lamont
K Ostin(i)
A Brackin(ii)
B Rowe(iii)
Former non-executive directors
M Sandblom(iv) Non-executive Chairman from 28 May 2021 to 24
August 2021; Executive Chairman from 25 August 2021
S Weiss(v) Non-executive Chairman until 28 May 2021
C Hatton(vi)
R Amos(vii)
Total
Fees and
allowances
$
Post-
employment
benefits
$
Total
$
115,000
115,000
112,161
-
11,500
10,925
126,500
125,925
11,216
123,377
-
-
103,674
10,367
114,041
-
98,077
-
-
9,808
107,885
-
1
-
30,263
248,333
31,250
125,000
-
114,583
490,426
602,916
-
-
-
-
1
-
3,026
33,289
23,592
271,925
3,125
34,375
11,875
136,875
-
-
10,885
125,468
49,042
57,277
539,468
660,193
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
(i) Ms Ostin was appointed on 6 August 2021.
(ii) Mr Brackin was appointed on 6 August 2021.
(iii) Ms Rowe was appointed on 20 September 2021.
(iv) As an incoming substantial shareholder of the Company, Mr Sandblom requested that he receive a nominal fee of $1 in relation to his appointment as Chairman and then Non-
Executive Director from his commencement on 28 May 2021. Mr Sandblom was appointed Executive Chairman effective 25 August 2021.
(v) In FY21, the Board (excluding Mr Weiss) approved a one-off additional payment of $50,000 to Mr Weiss to reflect his significant responsibilities and duties leading up to the
completion of the Blake acquisition and for the period in which he acted in the capacity of an interim CEO between 12 April 2021 to 28 May 2021 as a result of Ms Rebekah
O’Flaherty’s resignation on 9 April 2021. The additional payment was made on 15 June 2021. Mr Weiss resigned on 17 September 2021.
(vi) Ms Hatton resigned on 24 September 2021.
(vii) Mr Amos resigned on 28 May 2021.
23
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Directors' report - remuneration report
30 June 2022
5. Service agreements
Non-executive directors do not have fixed term contracts with the Company. On appointment to the Board, all non-executive
directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the
Board policies and terms, including compensation. Non-executive directors retire by whichever is the longer period: the third
annual general meeting following their appointment or the third anniversary date of appointment but may then be eligible for
re-election.
During the reporting period, the Board determined that the Chairman, Matthew Sandblom, has an active role in the day-today
management of the Company particularly in the areas of Strategy and Product. Consequently, the Board agreed that
Matthew’s title be changed to ‘Executive Chairman’ on 24 August 2021 as this better reflects his current roles and
responsibilities. The appointment as Executive Chairman took effect on 25 August 2021, and there is no fixed term to his
appointment. In addition to his letter of appointment as a director, Matthew entered a standard service agreement to provide
his services as an executive KMP. The details of Matthew’s service agreement as at 30 June 2022 is provided below:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Matthew Sandblom
Educational Technology Strategic Advisor
25 August 2021
12 months with option to extend.
Matthew is entitled receive a fee of $300 per hour plus GST up to $100,000 per annum
The fee is in consideration for providing company strategy, product strategy and
education technology strategy advice. Either party may terminate the service
agreement by giving 60 days’ notice in writing or earlier termination for a material breach
of contract.
During the reporting period, the remuneration received by the Executive Chairman under this agreement is $1 with no further
amounts accruing or payable. The service agreement with Matthew has been extended for 12 months to August 2023 on the
same terms.
Remuneration and other terms of employment for executives are formalised in employment agreements. The CEO and CFO
do not have a fixed term contract with the Company. Details of the CEO’s and CFO’s employment agreements as at 30 June
2022 are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Jose Palmero
Chief Executive Officer
28 May 2021*
Open ended
Jose will receive a fixed annual remuneration of $525,000, inclusive of statutory
superannuation. Jose will be eligible to receive an annual STI package with a target STI
of 50% of his fixed annual remuneration, as determined by the Board. Payment of the
cash bonus will depend on the Group’s performance and Jose’s achievement of certain
key performance indicators or at the discretion of the Board. As part of a LTI package,
Jose may be entitled to receive an equity-based award under the LTI plan with a value
equivalent to 50% of his fixed annual remuneration. Either party may terminate the
employment contract by giving six months’ notice in writing. The Company may
terminate Jose’s employment contract by making a payment in lieu of notice. In the
event of serious misconduct or other specific circumstances warranting summary
dismissal, the Company may terminate Jose’s employment contract immediately by
notice in writing and without payment in lieu of notice.
*On 24 August 2021, the Board resolved that Jose period as Interim CEO be waived
and that effective 25 August 2021, he would become CEO on an ongoing basis.
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3P Learning Limited
Directors' report - remuneration report
30 June 2022
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Anton Clowes
Chief Financial Officer
26 April 2022
Open ended
Anton will receive annual fixed remuneration of $350,000 inclusive of statutory
superannuation. Anton will be eligible to receive an annual short-term incentive with a
target STI of 25% of his fixed annual remuneration, as determined by the Board.
Payment of the cash bonus will depend on the Group’s performance and Anton’s
achievement of certain key performance indicators or at the discretion of the Board. As
part of a long-term incentive package Anton may be entitled to receive an equity-based
award under the LTI plan with a value equivalent to 25% of his fixed annual
remuneration. Either party may terminate the employment contract by giving three
months’ notice in writing. The Company may terminate Anton’s employment contract by
making a payment in lieu of notice. In the event of serious misconduct or other specific
circumstances warranting summary dismissal, the Company may terminate Anton’s
employment contract immediately by written notice and without payment in lieu of
notice.
6. Share-based compensation
Issue of shares
No shares were issued to directors or any other KMP as part of compensation during the year ended 30 June 2022.
Options
No options were issued to KMP as part of compensation during the year ended 30 June 2022. No NEDs held options during
the year. No options (comprising of former year option plans) vested with nil intrinsic value during the financial year ended
30 June 2022. The Company note that the 2,867,647options were lapsed during the financial year ended 30 June 2022.
No options were on issue as at 30 June 2022.
Performance Rights
No performance rights were issued to KMP as part of compensation during the year ended 30 June 2022 and no additional
performance rights have been granted to any KMP since the end of the reporting period.
No performance rights have been issued to NEDs to date.
The Company notes that 93,381 Performance Rights lapsed in July 2022, and 509,175 Performance Rights under the LTI
in relation to the FY20 will lapse in August 2022.
Share Appreciation Rights
The Company issued 935,008 SARs to KMP during the year ended 30 June 2022. No additional SARs have been granted
to any KMP since the end of the reporting period. No SARs have been issued to NEDs to date.
Name
Number
Accounting Grant
Date
Accounting
Fair Value
Exercise
Price * Vesting Date
Jose Palmero
753,589
7 February 2022
$0.679
Anton Clowes
181,419
3 June 2022
$0.679
-
-
August 2024
August 2024
Expiry Date
If vested, 5 years
from Grant Date
If vested, 5 years
from Grant Date
*The value of the shares allocated is based on the number of rights validly exercised multiplied by the difference between
the Market Price of the shares at the date of exercise and the notional exercise price ($1.35).
25
3P Learning Limited
Directors' report - remuneration report
30 June 2022
7. Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of KMP of the
Group, including their personally related parties, is set out below:
Balance at the
start of the year
Received as part
of remuneration
Additions
Disposals
/other
Balance at the
end of the year
Ordinary shares
Non-Executive Directors
Mark Lamont
Allan Brackin
Kathy Ostin
Belinda Rowe
Executive KMP
-
-
-
-
Matthew Sandblom(i)
137,220,000
Jose Palmero(ii)
Anton Clowes
-
-
137,220,000
-
-
-
-
-
-
-
-
222,895
-
-
-
-
4,535
-
-
-
-
222,895
-
-
(250,000)
136,970,000
-
-
-
4,535
227,430
(250,000)
137,197,430
(i) During the year Matthew Sandblom gifted 2,000,000 ordinary shares to an Australian charitable trust, Blake Beckett Trust. As Matthew is the director and sole shareholder
of the corporate trustee of the Blake Beckett Trust that holds the shares as trustee for Blake Beckett Trust, there is a net nil change in the number of shares in relation to
that transaction.
(ii) As Jose does not hold a direct interest in shares of 3P Learning or through entities that he controls, the figures above have been disclosed as nil. However, for transparency,
Jose has an economic interest in 6,850,000 3PL Shares implicitly through his 50% ownership status in the BeL Unit Trust, which holds 13,700,000 units.
Former Directors and KMP
Ordinary shares
Non-Executive Directors
Sam Weiss(ii)
Claire Hatton(iii)
Executive KMP
Dimitri Aroney(iv)
Balance at the
start of the year
Received as part of
remuneration
Additions
Disposals
/other
Balance at the
end of the year(i)
637,277
41,526
7,121
685,924
-
-
-
-
-
-
-
-
-
-
-
-
n/a
n/a
n/a
n/a
(i) As individuals have ceased to be KMP at the end of the year the balance of ordinary shares are shown as n/a.
(ii) Sam Weiss ceased to be a non-executive director effective 17 September 2021.
(iii) Claire Hatton ceased to be a non-executive director effective 24 September 2021.
(iv) Dimitri Aroney ceased to be a member of KMP effective 26 April 2022 and ceased employment on 1 July 2022.
Other share-based holdings
The number of share appreciation rights, performance rights and options held during the financial year by each director and
other members of KMP of the Group, including their personally related parties, is set out below:
Award
Share
Appreciation
Rights
Share
Appreciation
Rights
Jose
Palmero
Anton
Clowes
Balance at
beginning of
year
Rights granted
Vested
Expired /
forfeited / lapsed
Balance at end of
year
-
-
753, 589
181,419
-
-
-
-
753, 589
181,419
26
3P Learning Limited
Directors' report - remuneration report
30 June 2022
The following information is relevant to the number of performance rights and options held by former KMP during the financial
year:
Award
Options
Performance
Rights
Performance
rights
Rebekah
O’Flaherty
Dimitri
Aroney
Balance at
beginning of year
Rights granted
Vested
2,867,647
509,175
93,381
-
-
-
-
-
-
Expired /
forfeited /
lapsed
(2,867,647)(i)
-
-
Balance at end of
year
nil
509,175(ii)
93,381(iii)
(i)
(ii)
(iii)
2,867,647 options lapsed in FY22 with respect to FY19 LTI plan.
509,175 performance rights in relation to the FY20 LTI Plan will lapse in August 2022.
93,381 performance rights in relation to the FY21 LTI Plan lapsed on 1 July 2022 on cessation of his employment.
8. Other transactions with KMP and their related parties
Payment for publishing and distribution services
Since FY21 the Group has entered into a Publishing and Distribution Agreement with Kalaci Pty Ltd (trading as Pascal
Press) (‘Kalaci’), a company which both Matthew Sandblom and Jose Palmero have a beneficial economic interest. Under
the agreement, Kalaci receives a share of the net receipts received by Blake from orders placed by Blake customers and
Blake receives a share of the net receipts received by Kalaci from its sales of various Blake products to Kalaci customers.
The terms of the agreement were negotiated on arm’s length terms at the time of the Blake acquisition in May 2021 and is
subject to normal publishing terms and conditions. During the year, $208,132 was incurred in relation these services and
$27,172 is payable as at 30 June 2022.
Payment for transition services
The Group entered into a Transition Services Agreement with Kalaci in May 2021, as part of the acquisition of Blake for a
period of up to 12 months for the purpose of sharing common administrative costs for a limited period of time following
completion of the Blake acquisition. The agreement provided for an option to extend the services on a month-to-month basis,
if required to prevent any material disruption to the business. The agreement has extended to transition services related to
integration during the year. The agreement is currently ongoing and reviewed monthly and extended on this basis. During
the year, $880,196 was incurred in relation to these services and $36,559 is payable as at 30 June 2022.
Lease of office premise from Matthew Sandblom
The Group leases an office premise at 655 Parramatta Road, Leichhardt NSW 2040, from Matthew Sandblom. As at 30
June 2022, the lease continues month to month under the original terms of the lease. The terms of the lease were
negotiated on arm’s length terms at the time of the Blake acquisition and is subject to normal commercial terms and
conditions. An independent valuation was completed at the time to determine the market rent of $410,000 per annum, and
further ensured the lease is on arm’s length terms and at comparable market rate. During the year, $398,000 was paid and
no amount is payable as at 30 June 2022.
Payment for software licence fees
The Group has a commercial agreement with ClickView, a company that operates a video technology platform and of which
Matthew Sandblom is a shareholder. Under the agreement, the Group is granted a licence to use ClickView’s video storage,
management, and delivery technology to deliver 3PL products. This arrangement was on foot prior to 3PL’s acquisition of
Blake eLearning in May 2021, and remains ongoing on normal commercial terms and conditions. During the year, $70,250
was incurred in relation to these services and no amount is payable as at 30 June 2022.
Payment for consultancy services from Matthew Sandblom
The Group has entered a consultancy agreement to engage Matthew Sandblom for his services to the Company. The
agreement is with a company of which Matthew is director and shareholder (ACN 608 009 007)(i). Under the consultancy
agreement, the Group will pay an hourly retainer of $300 per hour up to a cap of $100,000 for strategic advisory services
over the consultancy period. During the year, Matthew elected to receive a nominal fee of $1 under this agreement. This
agreement was renewed in August 2022 for a period of 12 months.
(i) The FY2021 Remuneration Report disclosed that the services agreement with Matthew was engaged through Pascal Education Services Pty Limited and that disclosure is now
amended in this report.
This concludes the remuneration report, which has been audited.
27
3P Learning Limited
Directors' report
30 June 2022
Officers of the Company who are former partners of Ernst & Young
There are no officers of the Company who are former partners of Ernst & Young.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations
Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Matthew Sandblom
Executive Chairman
22 August 2022
Sydney
28
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of 3P Learning Limited
As lead auditor for the audit of the financial report of 3P Learning Limited for the financial year ended
30 June 2022, I declare to the best of my knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of 3P Learning Limited and the entities it controlled during the financial
year.
Ernst & Young
Renay Robinson
Partner
22 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
29
3P Learning Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2022
Revenue
Other income
Interest income
Expenses
Administrative expenses - buyback of distributor rights
Administrative expenses and foreign exchange
Deferred contract costs
Depreciation and amortisation expenses
Employee expenses
Employee expenses - restructure and integration
Finance costs
Impairment of assets
Marketing expenses
Occupancy expenses
Professional fees - corporate advisory costs
Professional fees - other
Technology costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Loss for the year is attributable to:
Non-controlling interest
Owners of 3P Learning Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of 3P Learning Limited
Consolidated
Note 30 June 2022 30 June 2021
$'000
$'000
5
97,221
57,448
42
67
-
115
6
6
6
6
6
6
6
7
(873)
(3,517)
(3,999)
(11,937)
(47,226)
(1,494)
(189)
-
(18,225)
(1,306)
(508)
(2,352)
(6,886)
-
(4,077)
(1,016)
(8,313)
(34,971)
(2,450)
(237)
(4,818)
(2,534)
(654)
(5,476)
(1,139)
(3,656)
(1,182)
(11,778)
619
(563)
(431)
(431)
(994)
(27)
(536)
(563)
(27)
(967)
(994)
2,408
(9,370)
596
596
(8,774)
(1)
(9,369)
(9,370)
(1)
(8,773)
(8,774)
Basic earnings per share
Diluted earnings per share
Cents
Cents
37
37
(0.19)
(0.19)
(6.15)
(6.15)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
30
3P Learning Limited
Statement of financial position
As at 30 June 2022
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Lease receivables
Deferred contract costs
Other assets
Income tax receivable
Total current assets
Non-current assets
Plant and equipment
Intangibles
Right-of-use assets
Lease receivables
Deferred contract costs
Other assets
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Provisions
Income tax payable
Total current liabilities
Non-current liabilities
Contract liabilities
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Equity attributable to the owners of 3P Learning Limited
Non-controlling interest
Total equity
*
Refer to note 33 for detailed information on restatement of comparatives.
Consolidated
Note 30 June 2022 30 June 2021
$'000
$'000
(Restated)*
8
9
10
11
12
7
13
14
15
10
11
12
7
16
17
19
20
7
17
19
20
21
22
31,127
7,335
277
595
1,807
2,793
1,648
45,582
671
200,947
1,503
-
632
283
8,119
212,155
24,906
11,667
282
739
594
2,163
-
40,351
652
206,964
1,612
538
103
352
5,867
216,088
257,737
256,439
11,188
43,463
1,121
3,625
121
59,518
2,657
1,039
639
4,335
10,718
35,780
1,627
4,323
2,607
55,055
4,191
1,497
854
6,542
63,853
61,597
193,884
194,842
216,589
8,055
(30,743)
193,901
(17)
216,589
8,450
(30,207)
194,832
10
193,884
194,842
The above statement of financial position should be read in conjunction with the accompanying notes
31
3P Learning Limited
Statement of changes in equity
For the year ended 30 June 2022
Consolidated
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Non-
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2020
34,494
7,954
(20,838)
Loss after income tax benefit for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
(note 21)
Share-based payments (note 36)
Acquisition of a subsidiary in Blake eLearning
Pty Ltd (note 33)
-
-
-
-
(9,369)
596
596
-
(9,369)
182,095
-
-
-
(100)
-
-
-
-
Balance at 30 June 2021
216,589
8,450
(30,207)
-
(1)
-
(1)
-
-
11
10
21,610
(9,370)
596
(8,774)
182,095
(100)
11
194,842
Total equity
$'000
194,842
(563)
(431)
(994)
10
(27)
-
(27)
Consolidated
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Non-
controlling
interest
$'000
Balance at 1 July 2021
216,589
8,450
(30,207)
Loss after income tax benefit for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (note 36)
-
-
-
-
-
(536)
(431)
(431)
-
(536)
36
-
-
36
Balance at 30 June 2022
216,589
8,055
(30,743)
(17)
193,884
The above statement of changes in equity should be read in conjunction with the accompanying notes
32
3P Learning Limited
Statement of cash flows
For the year ended 30 June 2022
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees*
Interest received
Interest and other finance costs paid
Income taxes paid
Consolidated
Note 30 June 2022 30 June 2021
$'000
$'000
110,057
(91,377)
53
(189)
(5,780)
72,221
(69,408)
134
(237)
(1,415)
Net cash from operating activities
35
12,764
1,295
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payments for plant and equipment
Payments for intangibles
Proceeds from subleases
Net cash used in investing activities
Cash flows from financing activities
Share issue transaction costs
Repayment of lease liabilities
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
(189)
(440)
(4,673)
774
3,605
(321)
(5,532)
553
(4,528)
(1,695)
35
-
(2,075)
(115)
(1,694)
(2,075)
(1,809)
6,161
24,906
60
(2,209)
27,083
32
Cash and cash equivalents at the end of the financial year
8
31,127
24,906
*
Includes $3,301,000 of one-off integration and retention payments arising from the acquisition of Blake eLearning Pty
Ltd.
The above statement of cash flows should be read in conjunction with the accompanying notes
33
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 1. General information
The financial statements cover 3P Learning Limited as a Group consisting of 3P Learning Limited (the 'Company' or 'parent
entity') and the entities it controlled at the end of, or during, the financial year (collectively referred to as the 'Group'). The
financial statements are presented in Australian dollars, which is 3P Learning Limited's functional and presentation currency.
3P Learning Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business is:
655 Parramatta Road, Leichhardt
NSW 2040
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is
not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 22 August 2022. The
directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these Accounting
Standards and Interpretations did not have any significant impact on the financial performance or position of the Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Net current asset deficiency
As at 30 June 2022, the Group was in a net current liability position of $13,936,000 (2021: $14,704,000) of which $43,463,000
(2021: $35,780,000) are contract liabilities that are expected to be recognised as revenue in the next financial year with no
further cash outflows to the Group. Accordingly, the financial statements continue to be prepared on a going concern basis.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 31.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of 3P Learning Limited as at 30
June 2022 and the results of all subsidiaries for the year then ended.
34
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses
incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises
the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in
profit or loss.
Operating segments
Operating segments are presented on the same basis as the internal reports provided to the Chief Operating Decision Makers
('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is 3P Learning Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into the entity's functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange
for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a
customer; identifies the performance obligations in the contract; determines the transaction price which takes into account
estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance
obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and
recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer
of the goods or services promised.
35
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration
is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject
to the constraining principle are initially recognised as contract liabilities in the form of a separate refund liability.
Licence fees
The Group recognises revenue pursuant to software licence agreements upon the provision of access to its customers of
the Group’s intellectual property as it exists at any given time during the period of the licence. Revenue is therefore
recognised over the duration of the agreement or for as long as the customer has been provided access, when persuasive
evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable.
Net commission revenue
The Group recognises commission revenue pursuant to a distribution agreement at the point of time when it sells a third
party’s online products to customers which provide these customers with access to the third party’s intellectual property as
it exists at any given time. Revenue from the sale of third party products is recorded on a net basis when the performance
obligations in relation to the online product are completed, consistent with an agency relationship.
Copyright licence fee
Copyright licence fee revenue is earned in relation to the Group's material and resources when they are reproduced by third
parties. Revenue is recognised when the Group's entitlement is assessed by the copyright agency.
Interest
Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is
the rate that discounts estimated future cash receipts through the expected life of the financial asset to the net carrying
amount of the financial asset. Interest includes interest income related to subleases classified as a finance lease.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
●
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
36
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
3P Learning Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated
group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to
account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within
group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a
contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Research and development rebates
Research and development rebates are credited against tax expense and are not treated as revenue.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic environment.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
37
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Costs to obtain a contract
The Group has elected to apply the optional practical expedient for sales commissions paid to employees for contracts
obtained from external customers. This allows the Group to immediately expense sales commissions (included under
employee expenses) because the amortisation period of the asset that the Group otherwise would have used is one year or
less.
Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and equipment over their
expected useful lives as follows:
Furniture & fittings
Computer equipment
Office equipment
three to seven years
two to three years
three to five years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group.
Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Right-of-use assets
The determination of whether a contract or part of a contract is or contains a lease is based on the substance of the
arrangement at inception date. It will be considered as a lease if it conveys the right to use an asset (the underlying asset)
for a period in exchange for consideration.
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the
lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for
any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms
of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as
incurred.
Lessor accounting
As a lessor, the Group classifies its leases as either operating or finance leases. A lease is classified as a finance lease if it
transfers substantially all the risks and rewards incidental to ownership of the underlying asset and classified as an operating
lease if it does not.
Lease receivables:
For rental income from a sublease classified as a finance lease, a lease receivable is recognised at an amount equal to the
net investment in the lease. Subsequent to initial measurement, the lease receivable is decreased by the sublease payment
received, increased by interest revenue (unwinding of discounting), less any allowance for expected credit losses.
38
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising
from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in
the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or
period.
Internally generated intangible assets, excluding capitalised development costs, are not capitalised and an expense is
recognised in the statement of comprehensive income in the year in which the expenditure is incurred.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment,
or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.
Product development
Research costs are expensed in the period in which they are incurred. Costs incurred for the development of software code
that enhances or modifies, or creates additional capability to, existing controlled systems and meets the definition of and
recognition criteria are recognised as intangible software assets. Development costs are capitalised when it is probable that
the project will be a success considering its commercial and technical feasibility; the Group is able to use or sell the asset;
the Group has sufficient resources and intent to complete the internal development and their costs can be measured reliably.
Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit, being their
finite useful life of three years. Amortisation of the asset begins when development is complete and the asset is available for
use.
Capitalised development costs, including acquired product development, are amortised on a straight-line basis over the
period of the expected benefit, being their finite useful life of three to five years.
Intellectual property
Significant costs associated with acquired intellectual property rights are deferred and amortised on a straight-line basis over
the period of their expected benefit, being their finite life of up to five years.
Patents and trademarks
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the period
of their expected benefit, being their finite useful life of three to ten years.
Customer contracts and distributor relationships
Customer contracts and distributor relationships acquired are amortised over the period in which the related benefits are
expected to be realised, being their finite useful life of between one and two years for customer contracts and five years for
distributor relationships.
Deferred contract costs
Deferred contract costs represent capitalised distributor commissions incurred to obtain customer contracts. When those
costs support the delivery of goods and services in the future and are expected to be recovered, they are deferred in the
statement of financial position and expensed on a basis consistent with the transfer of goods and services to which these
costs relate. The Group expenses deferred contract costs over the term that reflects the expected period of the benefit.
Impairment of non-financial assets
Goodwill is not subject to amortisation and is tested annually for impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable amount.
39
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a
customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration
(whichever is earlier) before the Group has transferred the goods or services to the customer.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or
a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset
is fully written down.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for
the lease payments made.
Finance costs
Finance costs are expensed in the period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is
probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of
money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Employee benefits expected to be settled within 12 months of the reporting date are measured at the amounts expected to
be paid when the liabilities are settled.
40
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Other long-term employee benefits
Employee benefits not expected to be settled within 12 months of the reporting date are measured at the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration
is given to expected future wage and salary levels, the experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the reporting date on high-quality corporate bonds with terms to
maturity and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is determined using the Binomial
option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate
for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services
that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and
best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value are used maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
41
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The acquisition method of accounting is used to account for business combinations when the acquired set of activities and
assets meets the definition of a business and control is transferred to the Group. To determine whether a set of activities and
assets constitutes a business, the Group has the choice to apply a `concentration test', which is met if substantially all of the
fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.
Alternatively, to determine if a business has been acquired, the Group assesses whether (as a minimum) an input and
substantive process has been acquired and whether there is an ability to produce outputs from these.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit
or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value
of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of 3P Learning Limited, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of additional ordinary shares that would have been outstanding assuming conversion of all dilutive potential
ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
42
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Comparatives
Comparatives in the statement of profit or loss and other comprehensive income, and the statement of financial position, the
statement of cash flows and notes to the financial statement have been realigned to the current year's presentation. There
has been no effect on the profit for the year due to the realignment.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual reporting period ended 30 June 2022. The adoption of these
Accounting Standards and Interpretations is not expected to have any significant impact on the Group’s financial statements.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Goodwill
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
has suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-
generating units have been determined based on value-in-use calculations. These calculations require the use of
assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future
cash flows. Refer to note 14 for further information.
Impairment of non-financial assets other than goodwill
The Group assesses the impairment of non-financial assets other than goodwill at each reporting date by evaluating
conditions specific to the Group and to the particular asset that may lead to impairment. If an impairment trigger exists, the
recoverable amount of the asset is determined. This involves assessing the value of the asset at fair value less costs of
disposal and using value-in-use models which incorporate a number of key estimates and assumptions.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using a Binomial model taking into account
the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to
equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next
annual reporting period but may impact profit or loss and equity. Refer to note 36 for further information.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit
loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact of the
COVID-19 pandemic and forward-looking information that is available. The allowance for expected credit losses, as disclosed
in note 9, is calculated based on the information available at the time of preparation. The actual credit losses in future years
may be higher or lower.
43
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations
or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously
estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold.
Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining
the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business
for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based
on the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the
carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such
determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Product development costs
The Group capitalises development costs for a project in accordance with the accounting policy. Initial capitalisation of costs
is based on management’s judgement that technological and economic feasibility is confirmed. In determining the amounts
to be capitalised, as with the nature of Software-as-a-Service delivery model, key judgements are required in determining
whether incremental product enhancements will provide additional future economic benefit.
Business combinations
As discussed in note 2, business combinations are initially accounted for on a provisional basis. The fair value of assets
acquired, liabilities and contingent liabilities assumed are initially estimated by the Group taking into consideration all
available information at the reporting date. Fair value adjustments on the finalisation of the business combination accounting
is retrospective, where applicable, to the period the combination occurred and may have an impact on the assets and
liabilities, depreciation and amortisation reported.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have,
on the Group based on known information. This consideration extends to the nature of the products and services offered,
customers, supply chain, staffing and geographic regions in which the Group operates.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into three operating segments based on end-users or customers: Business-to-School ('B2B'),
Business-to-Customer ('B2C') and Corporate. These operating segments are based on the internal reports that are reviewed
and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing
performance and in determining the allocation of resources.
The CODM reviews underlying EBITDA (earnings before interest, tax, depreciation and amortisation), which is EBITDA
adjusted for interest revenue, restructure and integration costs, corporate advisory costs and costs associated with the
buyback of distribution rights. The accounting policies adopted for internal reporting to the CODM are consistent with those
adopted in the financial statements.
The information reported to the CODM is on a monthly basis. The CODM does not regularly review segment assets and
segment liabilities. Refer to statement of financial position for assets and liabilities.
Change in the operating segments:
On 28 May 2021, the Group acquired Blake eLearning Pty Ltd and its controlled entities. As a result of this significant
acquisition, the Group reviewed and aligned the reporting segments into B2B, B2C and Corporate in line with the internal
reports provided to the CODM. Accordingly, 30 June 2021 comparative segment disclosures have been realigned to the
current year's presentation.
44
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 4. Operating segments (continued)
Products and services
Refer to note 5 for information on the Group's products and services.
Intersegment transactions
Intersegment transactions were made at market rates and are eliminated on consolidation.
Major customers
There are no major customers that contributed more than 10% of revenue to the Group recognised for the year ended 30
June 2022 and 30 June 2021.
Operating segment information
Consolidated - 30 June 2022
Revenue
Sales to external customers
Interest income
Total revenue
Underlying EBITDA
Administrative expenses - buyback of distributor rights
Depreciation and amortisation
Employee expense - restructure and integration
Finance costs
Interest income
Professional fees - corporate advisory costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Consolidated - 30 June 2021
Revenue
Sales to external customers
Interest income
Total revenue
Underlying EBITDA
Depreciation and amortisation
Employee expense - restructure and integration
Finance costs
Impairment of assets
Interest income
Professional fees - corporate advisory costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
B2B
$'000
B2C
$'000
Corporate
$'000
Total
$'000
57,933
-
57,933
39,288
-
39,288
-
67
67
7,475
9,202
(2,925)
97,221
67
97,288
13,752
(873)
(11,937)
(1,494)
(189)
67
(508)
(1,182)
619
(563)
B2B
$'000
B2C
$'000
Corporate
$'000
Total
$'000
53,671
-
53,671
3,777
-
3,777
-
115
115
11,164
1,680
(3,443)
57,448
115
57,563
9,401
(8,313)
(2,450)
(237)
(4,818)
115
(5,476)
(11,778)
2,408
(9,370)
45
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 5. Revenue
Disaggregation of revenue
Revenue from contracts with customers is disaggregated into the following categories:
Licence fees
Net commission revenue
Copyright licence fees
Other revenue
Revenue
Consolidated
30 June 2022 30 June 2021
$'000
$'000
92,750
-
2,885
1,586
37,673
16,277
3,234
264
97,221
57,448
Revenue from external customers by geographic regions based on customer location is $49,319,000 (2021: $35,469,000) in
Asia-Pacific ('APAC'), $26,396,000 (2021: $8,972,000) in United States of America, Canada and South America ('Americas')
and $21,506,000 (2021: $13,007,000) in Europe, Middle-East and Africa ('EMEA'). The relationship between the
disaggregated revenue information set out above and the segment information is explained below:
The segment revenue disclosed in note 4 is based on the end-users or customers. The Group's main revenue-generating
activity is the worldwide sale of online educational programs via licence fees and the sale of these products are recognised
over time within licence fees.
The Group generates revenue licence fees in the B2B and B2C operating segments. Copyright licence fees and ancillary
revenue streams are generated only in the B2B operating segment. Other revenue includes the sale of workbooks, ebooks
and professional learning generated in the B2B and B2C operating segments. In the prior period, the Group in its
capacity as an agent, earned net commission revenue from the sale and distribution of third-party (Blake eLearning
Pty Ltd) products. Net commission revenue was recognised at a point in time. Subsequent to the acquisition on 28 May
2021 of Blake eLearning Pty Ltd, the sale of these products is now recognised over time within licence fees.
Licence fees are recognised over time. All other revenue streams are recognised at a point in time.
The revenue recognised in the reporting period that was included in the contract liabilities balance at the beginning of the
period was $35,780,000 (2021: $23,877,000). Contract liabilities are generally incurred at the beginning of the contract
period. Refer to note 17 for details on contract liabilities.
Note 6. Expenses
Consolidated
30 June 2022 30 June 2021
$'000
$'000
110
240
27
918
107
158
29
905
1,295
1,199
Loss before income tax includes the following specific expenses:
Depreciation
Fixtures and fittings
Computer equipment
Office equipment
Right-of-use assets
Total depreciation
46
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 6. Expenses (continued)
Amortisation
Product development*
Intellectual property
Patents and trademarks
Customer contracts and distributor relationships
Total amortisation
Total depreciation and amortisation
Deferred contract costs
Impairment of assets
Intangibles - product development**
Finance costs
Interest and finance charges paid/payable on borrowings facility
Interest and finance charges paid/payable on lease liabilities
Finance costs expensed
Net foreign exchange (gain)/loss
Net foreign exchange (gain)/loss
Net loss on disposal
Net loss on disposal of property, plant and equipment
Leases
Short-term lease payments
Marketing expenses
Advertising expenses
Commission paid on application sales
Other marketing expenses
Total marketing expenses
Employee expenses
Salaries and wages
Bonus and commission
Superannuation
Total employee expenses
Consolidated
30 June 2022 30 June 2021
$'000
$'000
7,982
155
14
2,491
10,642
11,937
3,999
6,862
8
20
224
7,114
8,313
1,016
-
4,818
83
106
189
96
141
237
(444)
697
160
134
534
70
13,068
4,183
974
2,355
-
179
18,225
2,534
38,423
4,500
4,303
28,082
3,644
3,245
47,226
34,971
*
The useful life of certain Mathletics modules were re-assessed, and as a result, an accelerated depreciation charge of
$837,000 (2021: $731,000) was recognised.
** Following a product strategy reset to focus on 'hero product', an impairment expense of $4,818,000 was recognised on
the ReadiWriter product suite in the previous financial year.
47
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 7. Income tax
Income tax benefit
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustments in respect of current income tax for the previous year
Aggregate income tax benefit
Deferred tax included in income tax benefit comprises:
Increase in deferred tax assets
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-deductible expenses
Impact of foreign tax rate
Current year tax benefit not recognised
Research and development tax offset
Foreign exchange fluctuation
Adjustments in respect of current income tax for the previous year
Income tax benefit
Tax losses not recognised relating to various tax jurisdictions
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at statutory tax rates
Consolidated
30 June 2022 30 June 2021
$'000
$'000
1,797
(2,252)
(164)
1,542
(3,759)
(191)
(619)
(2,408)
(2,252)
(3,759)
(1,182)
(11,778)
(355)
(3,533)
20
(152)
298
(314)
48
(455)
(164)
(619)
1,374
(113)
511
(412)
(44)
(2,217)
(191)
(2,408)
Consolidated
30 June 2022 30 June 2021
$'000
$'000
51,829
48,065
12,814
12,022
Unrecognised tax benefits includes $8,398,000 unused capital losses on disposal of investments (2021: $8,398,000).
48
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 7. Income tax (continued)
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Accrued expenses
Contract liabilities
Intangibles
Leases
Plant and equipment
Research and development credits
Royalty asset
Unrealised foreign exchange fluctuation
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss
Additions through business combinations (note 33)
Closing balance
Income tax receivable
Income tax payable
Note 8. Cash and cash equivalents
Current assets
Cash at bank and in hand
Short-term deposits
Total cash and cash equivalents
49
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(Restated)
2,532
9,914
(8,811)
21
(62)
3,124
1,284
117
2,821
8,158
(10,499)
64
(39)
3,942
1,168
252
8,119
5,867
5,867
2,252
-
8,119
6,753
3,759
(4,645)
5,867
Consolidated
30 June 2022 30 June 2021
$'000
$'000
1,648
-
Consolidated
30 June 2022 30 June 2021
$'000
$'000
121
2,607
Consolidated
30 June 2022 30 June 2021
$'000
$'000
21,127
10,000
20,906
4,000
31,127
24,906
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 9. Trade and other receivables
Current assets
Trade receivables
Less: Allowance for expected credit losses
Other receivables
GST receivable
Total trade and other receivables
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(Restated)
6,750
(148)
6,602
718
15
10,161
(190)
9,971
1,696
-
7,335
11,667
Allowance for expected credit losses
The Group has recognised a gain of $42,000 (2021: loss of $110,000) in profit or loss in respect of impairment of receivables
for the year ended 30 June 2022.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Expected credit loss rate
Carrying amount
30 June 2022 30 June 2021 30 June 2022 30 June 2021 30 June 2022 30 June 2021
Allowance for expected
credit losses
Consolidated
%
%
$'000
$'000
$'000
$'000
Not overdue
0 to 3 months overdue
3 to 6 months overdue
More than 6 months overdue
0.55%
2.61%
20.93%
52.47%
0.48%
0.50%
5.02%
71.59%
5,890
437
372
51
7,673
2,011
298
179
32
11
78
27
6,750
10,161
148
37
10
15
128
190
The expected credit loss rate across the Group for each subsidiary has remained consistent. The movement in percentages
of expected loss rates have shifted due to a change in the mix of aged receivables between each subsidiary.
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Unused amounts reversed
Closing balance
Consolidated
30 June 2022 30 June 2021
$'000
$'000
190
-
-
(42)
148
80
123
(9)
(4)
190
50
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 10. Lease receivables
Current assets
Lease receivables
Non-current assets
Lease receivables
Total lease receivables
Reconciliation
Reconciliation of the fair values at the beginning and end of the current and previous
financial year are set out below:
Opening balance
Addition
Net cash receipt from subleases
Exchange differences
Interest income
Other changes
Closing balance
Minimum lease receivables in future financial years are as follows:
One year or less
Between one to two years
Total commitments
Less: Future interest income
Total lease receivables
Consolidated
30 June 2022 30 June 2021
$'000
$'000
595
739
-
538
595
1,277
1,277
-
(774)
60
32
-
1,758
283
(553)
(205)
51
(57)
595
1,277
Consolidated
30 June 2022 30 June 2021
$'000
$'000
604
-
604
(9)
595
769
546
1,315
(38)
1,277
51
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 11. Deferred contract costs
Current assets
Deferred contract costs
Non-current assets
Deferred contract costs
Reconciliation of deferred contract costs:
A reconciliation of the written down values at the beginning and end of the current and
previous financial year are set out below:
Opening balance
Additions
Exchange differences
Deferred contract costs (refer note 2 and note 6)
Closing balance
Note 12. Other assets
Current assets
Prepayments
Term deposits
Non-current assets
Prepayments
Total other assets
Consolidated
30 June 2022 30 June 2021
$'000
$'000
1,807
594
632
2,439
103
697
697
5,741
-
(3,999)
216
1,485
12
(1,016)
2,439
697
Consolidated
30 June 2022 30 June 2021
$'000
$'000
2,748
45
2,793
2,120
43
2,163
283
352
3,076
2,515
52
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 13. Plant and equipment
Non-current assets
Furniture & fittings - at cost
Less: Accumulated depreciation
Computer equipment - at cost
Less: Accumulated depreciation
Office equipment - at cost
Less: Accumulated depreciation
Total plant and equipment
Consolidated
30 June 2022 30 June 2021
$'000
$'000
1,092
(909)
183
3,258
(2,844)
414
285
(211)
74
671
1,398
(1,153)
245
3,295
(2,938)
357
252
(202)
50
652
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2020
Additions
Additions through business combinations (note 33)
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2021
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2022
Furniture
and fittings
$'000
Computer
equipment
$'000
Office
equipment
$'000
Total
$'000
405
71
-
(119)
(5)
(107)
245
90
(44)
2
(110)
183
176
242
101
-
(4)
(158)
357
300
-
(3)
(240)
414
70
8
2
(2)
1
(29)
50
50
-
1
(27)
74
651
321
103
(121)
(8)
(294)
652
440
(44)
-
(377)
671
53
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 14. Intangibles
Non-current assets
Goodwill - at cost
Product development - at cost
Less: Accumulated amortisation and impairment
Intellectual property - at cost
Less: Accumulated amortisation
Patents and trademarks - at cost
Less: Accumulated amortisation
Customer contracts and distributor relationships - at cost
Less: Accumulated amortisation
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(Restated)
171,293
171,340
41,865
(15,474)
26,391
579
(155)
424
2,015
(1,850)
165
5,410
(2,736)
2,674
37,382
(7,493)
29,889
489
(8)
481
1,924
(1,836)
88
5,410
(244)
5,166
Total intangibles
200,947
206,964
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2020
Additions
Additions through business
combinations (note 33)
Exchange differences
Impairment of assets
Amortisation expense
Balance at 30 June 2021
(restated)
Additions*
Exchange differences
Amortisation expense
Product
develop-
ment
$'000
Goodwill
$'000
Intellectual
property
$'000
Patents and
trademarks
$'000
Customer
contracts and
distributor
relation-
ships
$'000
Total
$'000
4,315
-
166,894
131
-
-
171,340
-
(47)
-
9,586
5,519
26,464
-
(4,818)
(6,862)
29,889
4,484
-
(7,982)
-
-
489
-
-
(8)
481
98
-
(155)
424
96
12
-
-
-
(20)
88
91
-
(14)
165
-
-
13,997
5,531
5,410
(20)
-
(224)
5,166
-
(1)
(2,491)
199,257
111
(4,818)
(7,114)
206,964
4,673
(48)
(10,642)
2,674
200,947
Balance at 30 June 2022
171,293
26,391
*
The product development additions above includes total amount capitalised of $3,088,000 for Writing Legends
programs.
54
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 14. Intangibles (continued)
Impairment testing of intangible assets – current financial year:
The Group announced the acquisition of Blake eLearning Pty Limited and its controlled entities on 28 May 2021. Refer to
note 33 for further details. The organisational structure was finalised in the second half of the current year, and accordingly
the Group reassessed its CGUs (‘cash-generating units’) to ensure they were aligned with how management monitors and
performs decision making, through the Group’s reporting structure. Consequently, management replaced the previously
reported CGUs of APAC, EMEA and the Americas with identified CGUs of B2B and B2C. Goodwill acquired through business
combinations is allocated to the lowest level within the entity at which the goodwill is monitored, being the two cash-generating
units, B2B and B2C.
The goodwill acquired through business combinations has been allocated to the following CGUs:
B2B
B2C
Total
Consolidated
30 June 2022
$'000
84,025
87,268
171,293
The recoverable amount of B2B and B2C CGUs was determined based on value-in-use calculations which require the use
of assumptions. The calculations use cash flow projections based on the business plan approved by management covering
a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below.
The following key assumptions were used in the discounted cash flow model:
(a) Post-tax discount rate: B2B 10.5% and B2C 10.5%.
(b) Operating cash flow projections are extracted from the most recent approved strategic plans or forecasts that relate to
the existing asset base. For each CGU, the cash flow projections for a five-year period have been determined based
on expectations of future performance. Key assumptions in the cash flows include sales volume growth and the costs
of doing business. These assumptions are based on expectations of market demand and operational performance.
Cash flow projections are based on risk-adjusted forecasts allowing for estimated changes in the business, the
competitive trading environment, legislation and economic growth.
(c) Terminal growth rate: B2B 3.0% and B2C 3.0%.
For the financial year ended 30 June 2022, the recoverable amount of net assets for all CGUs is greater than the carrying
value of the assets and therefore, the goodwill is not considered to be impaired.
Sensitivity
As disclosed in note 3, management have made judgements and estimates in respect of impairment testing of goodwill.
Management recognise that cash flow projections, discount rates and growth rates used to calculate the value-in-use of the
Group’s CGUs may vary from what has been estimated.
B2B
The recoverable amount of the B2B CGU as at 30 June 2022 is based on the above assumptions. Management note that
the recoverable amount is particularly sensitive to the post-tax discount rate and an increase of 1% in the post-tax discount
rate would result in the recoverable amount being equal to the carrying amount. Any reasonable possible change in the
EBITDA or terminal value growth rate would not result in impairment.
B2C
For the B2C CGU, any reasonable possible change in the key assumptions on which the recoverable amount is based would
not cause the CGU’s carrying amount to exceed its recoverable amount.
55
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 14. Intangibles (continued)
Impairment testing of intangible assets (previous financial year - restated):
In the previous financial year, the CGUs were APAC, EMEA and the Americas. The goodwill acquired through business
combinations was allocated to the following CGUs:
APAC
EMEA
Unallocated
Total
Consolidated
30 June 2021
$'000
3,012
1,434
166,894
171,340
Due to the close proximity of the acquisition date of 28 May 2021 and the date of the prior year financial report, the goodwill
of $166,894,000 was not allocated as the CODM was in the process of assessing and determining the appropriate CGUs. In
accordance with AASB 3 'Business combination', the Group had 12 months from the date of acquisition to finalise the
purchase price accounting and the allocation of fair value to goodwill and other indefinite life intangible assets. As the
business combination has been finalised in the current financial year, the goodwill has been allocated in the 30 June 2022
allocation of goodwill as shown above. Refer to note 33 for detailed information on the business combination.
In the previous year, the recoverable amount of APAC and EMEA CGU was determined based on value-in-use calculations
which require the use of assumptions. The calculations use cash flow projections based on the business plan approved by
management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth
rates stated below.
The following key assumptions were used in the discounted cash flow model:
(a) Post-tax discount rate: APAC 11.1% and EMEA 11.1%.
(b) Operating cash flow projections are extracted from the most recent approved strategic plans or forecasts that relate to
the existing asset base. For each CGU, the cash flow projections for a five-year period have been determined based
on expectations of future performance. Key assumptions in the cash flows include sales volume growth and the costs
of doing business. These assumptions are based on expectations of market demand and operational performance.
Cash flow projections are based on risk-adjusted forecasts allowing for estimated changes in the business, the
competitive trading environment, legislation and economic growth.
(c) Terminal growth rate: APAC 3.0% and EMEA 3.0%.
Note 15. Right-of-use assets
Non-current assets
Right-of-use assets
Less: Accumulated depreciation
Total right-of-use assets
Consolidated
30 June 2022 30 June 2021
$'000
$'000
2,516
(1,013)
3,301
(1,689)
1,503
1,612
The Group leases office premises under agreements of between one to five years with, in some cases, options to extend.
The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. The Group also leases
plant and equipment under agreements of between one to three years.
56
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 15. Right-of-use assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2020
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2021
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2022
Property
leases
$'000
Other
assets
$'000
Total
$'000
2,776
48
(381)
9
(889)
1,563
1,291
(584)
13
(882)
1,401
65
-
-
-
(16)
49
134
(45)
-
(36)
102
2,841
48
(381)
9
(905)
1,612
1,425
(629)
13
(918)
1,503
For other AASB 16 lease-related disclosures refer to the following:
●
●
●
●
consolidated statement of cash flows for repayment of lease liabilities;
note 6 for details of interest on lease liabilities and other lease expenses;
note 19 and note 35 for details of lease liabilities at the beginning and end of the reporting period; and
note 24 for the maturity analysis of lease liabilities.
Note 16. Trade and other payables
Current liabilities
Trade payables
Accrued expenses
Goods and service tax
Other payables
Total trade and other payables
Refer to note 24 for further information on financial instruments.
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(Restated)
2,393
8,206
-
589
1,779
7,878
230
831
11,188
10,718
57
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 17. Contract liabilities
Current liabilities
Contract liabilities
Non-current liabilities
Contract liabilities
Total contract liabilities
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(Restated)
43,463
35,780
2,657
4,191
46,120
39,971
Contract liabilities represent income billed in advance from the contracts with customers pertaining to licence revenue which
is recognised over the period of the licence. The aggregate amount of the transaction price allocated to the performance
obligations for current and non-current contract liabilities that are unsatisfied at the end of the reporting period were
$43,463,000 and $2,657,000 respectively as at 30 June 2022 (2021: $35,780,000 and $4,191,000 respectively) and are
expected to be recognised as revenue as outlined above. As at 30 June 2021, contract liabilities of $12,810,000 were
acquired from the business combination (refer note 33). At the reporting date, $11,147,000 (2021: $740,000) of the acquired
contract liabilities was recognised as revenue.
Note 18. Borrowings
Bank loans
The bank loan facilities are subject to variable interest rates, which are based on the bank bill swap rate ('BBSY'), plus a
margin. The banking facilities consisted of a $10,000,000 bank loan and a $2,000,000 bank guarantee that each mature on
30 days rolling terms. The banking facilities are secured by fixed and floating charges over the Group's assets.
Banking facilities
Bank guarantee and ancillary facility of $109,000 are available to the Group which is subject to a regular review.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank loans
Bank guarantee and ancillary facility
Used at the reporting date
Bank loans
Bank guarantee and ancillary facility
Unused at the reporting date
Bank loans
Bank guarantee and ancillary facility
Consolidated
30 June 2022 30 June 2021
$'000
$'000
10,000
2,109
12,109
10,000
114
10,114
-
1,482
1,482
-
18
18
10,000
627
10,627
10,000
96
10,096
As at the reporting date, there are outstanding bank guarantees of $1,482,000 (2021: $1,464,000) with the bank. There are
ongoing negotiations with the bank to extend this facility.
58
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 19. Lease liabilities
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Total lease liabilities
Refer to note 24 for maturity analysis of lease liabilities.
Refer to note 35 for details of changes in lease liabilities.
Note 20. Provisions
Current liabilities
Employee benefits
Lease make good
Other provisions
Non-current liabilities
Employee benefits
Lease make good
Other provisions
Total provisions
Consolidated
30 June 2022 30 June 2021
$'000
$'000
1,121
1,627
1,039
2,160
1,497
3,124
Consolidated
30 June 2022 30 June 2021
$'000
$'000
3,311
301
13
3,625
588
43
8
639
3,531
139
653
4,323
578
231
45
854
4,264
5,177
Employee benefits
Employee benefits comprise of provisions for annual leave and long service leave. Where an obligation is presented as
current, the Group does not have an unconditional right to defer settlement for more than 12 months.
Lease make good
The provision represents the present value of the estimated costs to make good the premises leased by the Group at the
end of the respective lease terms.
Other provisions
The provision represents redundancy and storage costs.
59
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 20. Provisions (continued)
Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
Consolidated - 30 June 2022
Carrying amount at the start of the year
Additional provisions recognised
Amounts used
Exchange differences
Unwinding of discount
Carrying amount at the end of the year
Note 21. Issued capital
Lease make
good
$'000
Other
provisions
$'000
370
43
(75)
(5)
11
344
698
1
(679)
1
-
21
Consolidated
30 June 2022 30 June 2021 30 June 2022 30 June 2021
Shares
Shares
$'000
$'000
Ordinary shares - fully paid
276,484,170 276,484,170
216,589
216,589
Movements in ordinary share capital
Details
Date
Shares
$'000
Balance
Issue of shares to vendors of Blake eLearning Pty Ltd at a deemed
issue price of $1.33 per share (note 33)
Share issue transaction costs
1 July 2020
139,484,170
34,494
28 May 2021
137,000,000
-
182,210
(115)
Balance
Balance
30 June 2021
276,484,170
216,589
30 June 2022
276,484,170
216,589
Ordinary shares
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders
should the Company be wound up, in proportions that consider both the number of shares held and the extent to which those
shares are paid up. The fully paid ordinary shares have no par value and the Company does not have a limited amount of
authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group's objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce
the cost of capital.
60
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 21. Issued capital (continued)
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the Group may adjust
the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company would be seen as value
adding.
The Group is subject to certain covenants on its financing arrangements and meeting these is given priority in all capital risk
management decisions. There have been no events of default on the financing arrangements during the financial year.
The capital risk management policy remains unchanged from the 30 June 2021 Annual Report.
Note 22. Reserves
Foreign currency reserve
Acquisition reserve
Share-based payment reserve
Consolidated
30 June 2022 30 June 2021
$'000
$'000
322
(798)
8,531
8,055
753
(798)
8,495
8,450
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign
operations to Australian dollars.
Acquisition reserve
The reserve resulted from the acquisition of non-controlling interests in a subsidiary. The acquisition of non-controlling
interest is not a business combination but is an equity transaction between owners. Accordingly, the difference between
consideration paid and identifiable net assets of the non-controlling interest has been accounted for in the acquisition reserve.
Share-based payment reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services. Refer to note 26 for further details.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2020
Foreign currency translation
Share-based payments
Balance at 30 June 2021
Foreign currency translation
Share-based payments
Balance at 30 June 2022
Foreign
currency
reserve
$'000
Acquisition
reserve
$'000
Share-based
payment
reserve
$'000
Total
$'000
157
596
-
753
(431)
-
322
(798)
-
-
(798)
-
-
(798)
8,595
-
(100)
8,495
-
36
8,531
7,954
596
(100)
8,450
(431)
36
8,055
61
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 23. Dividends
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Franking credits
Consolidated
30 June 2022 30 June 2021
$'000
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
1,798
118
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
●
●
●
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
Note 24. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate
risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different
methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of
interest rate and foreign exchange risks, and ageing analysis for credit risk.
The Board of Directors ('Board') have overall responsibility for the establishment and oversight of the risk management
framework. The Board has established an Audit and Risk Committee, which is responsible for managing risk. The committee
reports to the Board on its activities.
Risk management processes are established to identify and analyse the risks faced by the Group, to analyse the risk
exposure of the Group and appropriate procedures, controls and risk limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities.
The Audit and Risk Committee oversees how management monitors compliance with the Group’s risk management policies
and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through
foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
To a significant extent, the Group’s business currently enjoys natural hedges. The revenue that the Group obtains in a
particular foreign currency closely matches the expenses it incurs in that currency (such as the British Pound). The Board
believes that natural hedges presently mitigate any exchange rate volatility risk for the Group to an economically acceptable
level.
From time to time the Group enters into forward foreign exchange contracts to protect against exchange rate movements on
significant contracts with highly probable forecast cash flows.
62
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 24. Financial instruments (continued)
The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities (unhedged) at the
reporting date were as follows:
Consolidated
US dollars
Euros
Pound Sterling
New Zealand dollars
Canadian dollars
Other currencies
Assets
Liabilities
30 June 2022 30 June 2021 30 June 2022 30 June 2021
$'000
$'000
$'000
$'000
1,805
142
1,270
134
455
635
4,441
1,313
545
-
837
766
-
3,461
31
-
106
1
-
2
140
-
-
857
-
-
2
859
The Group had net assets denominated in foreign currencies of $4,301,000 (assets $4,441,000 less liabilities $140,000) as
at 30 June 2022 (2021: $2,602,000 (assets $3,461,000 less liabilities $859,000)). Based on this exposure, had the Australian
dollar weakened by 10%/strengthened by 10% (2021: weakened by 10%/strengthened by 10%) against these foreign
currencies with all other variables held constant, the Group's profit/loss before tax for the year would have been $430,000
higher/$430,000 lower (2021: $260,000 higher/$260,000 lower). The percentage change is the expected overall volatility of
the significant currencies, which is based on management's assessment of reasonable possible fluctuations.
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group is not exposed to any significant interest rate risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net
of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial
statements. The Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through
the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative
across all customers of the Group based on recent sales experience, historical collection rates and forward-looking
information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than one year.
The majority of schools and consumers pay upfront and the nature of the customer base has a low impact on the Group's
credit risk exposure.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents)
to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast
cash flows and matching the maturity profiles of financial assets and liabilities.
63
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 24. Financial instruments (continued)
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank loans
Bank guarantee and ancillary facility
Consolidated
30 June 2022 30 June 2021
$'000
$'000
10,000
627
10,627
10,000
96
10,096
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 30 June 2022
%
$'000
Weighted
average
interest rate 1 year or less
Between 1
and 2 years
$'000
Between 2
and 5 years Over 5 years
$'000
$'000
Remaining
contractual
maturities
$'000
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
-
-
3.36%
2,393
589
1,170
4,152
-
-
351
351
-
-
660
660
-
-
122
122
2,393
589
2,303
5,285
Consolidated - 30 June 2021
%
$'000
Weighted
average
interest rate 1 year or less
Between 1
and 2 years
$'000
Between 2
and 5 years Over 5 years
$'000
$'000
Remaining
contractual
maturities
$'000
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
-
-
3.36%
1,779
831
1,723
4,333
-
-
1,469
1,469
-
-
61
61
-
-
-
-
1,779
831
3,253
5,863
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above. The Group may repay debt when cash is sufficiently available, and this may occur earlier than contractually disclosed
above.
Note 25. Fair value measurement
The carrying amounts of trade and other receivables and trade and other payables approximate their fair values due to their
short-term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the
current market interest rate that is available for similar financial liabilities.
64
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 26. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits*
Post-employment benefits
Termination benefits
Share-based payments
Total
Consolidated
30 June 2022 30 June 2021
$
$
1,840,156
102,019
-
118,744
1,952,459
109,198
650,000
(112,093)
2,060,919
2,599,564
*
$240,000 was paid during the year out of a total retention bonus awarded to a now former KMP of $300,000 in FY21.
Note 27. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Ernst & Young, the auditor of the
Company, its network firms and unrelated firms:
Audit services - Ernst & Young (Australia)
Audit or review of the financial statements
Other services - Ernst & Young (Australia)
Tax services
Advisory services
Audit services - overseas unrelated firms
Audit or review of the financial statements
Note 28. Contingencies
Consolidated
30 June
2022
$
30 June 2021
$
515,691
651,398
31,500
52,500
12,875
-
84,000
12,875
599,691
664,273
21,861
9,489
The bank has given bank guarantees as at 30 June 2022 of $1,482,000 (2021: $1,482,000) for merchant facility and operating
leases.
Note 29. Commitments
The Group had no commitments as at 30 June 2022 and 30 June 2021.
65
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 30. Related party transactions
Parent entity
3P Learning Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 32.
Key management personnel
Disclosures relating to key management personnel are set out in note 26 and the remuneration report included in the
directors' report.
Transactions with related parties
The Group has a publishing, distribution and transition service agreement with Kalaci Pty Ltd (trading as Pascal Press) and
a software licence commercial agreement with Clickview Pty Ltd. Matthew Sandblom is a shareholder of both the companies.
The Group also has an office lease agreement with Matthew Sandblom, which has a lease term of 12 months.
The following transactions occurred with related parties:
Consolidated
30 June 2022 30 June 2021
$
$
Other income:
Other income from director related entities of Matthew Sandblom
Service fee income (25%) on workbook sales from director related entities of Matthew
Sandblom
38,918
3,324
175,111
-
Payment for services:
Occupancy and other expenses paid to director related entities of Matthew Sandblom
1,556,578
331,338
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables:
Trade receivables from director related entities of Matthew Sandblom
Consolidated
30 June 2022 30 June 2021
$
$
26,150
3,324
Current payables:
Trade payables to director related entities of Matthew Sandblom (2021 includes acquired
trade payables of $194,891)
63,731
289,584
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
66
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 31. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payment reserve
Accumulated losses
Total equity
Parent
30 June 2022 30 June 2021
$'000
$'000
(11,046)
29,650
(11,046)
29,650
Parent
30 June 2022 30 June 2021
$'000
$'000
37,196
31,518
231,283
227,669
44,788
29,604
60,175
45,551
216,589
8,531
(54,012)
216,589
8,495
(42,966)
171,108
182,118
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity and its subsidiary are parties to a deed of cross guarantee under which each company guarantees the
debts of the others. No deficiencies of assets exist in the subsidiary. Refer to note 34 for further information.
Contingent liabilities
The parent entity has given bank guarantees as at 30 June 2022 of $1,462,000 (2021: $1,460,000) for merchant facility and
operating leases.
Capital commitments - Plant and equipment
The parent entity had no capital commitments for plant and equipment as at 30 June 2022 and 30 June 2021.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
67
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 32. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2:
Name
3P Learning Australia Pty Limited
Into Science Pty Ltd*
3P International Holdings Pty Ltd
3P Learning Limited
3P Learning UK Limited
3P Learning Inc.
3P Learning Canada Limited
Blake eLearning Pty Ltd
Blake eLearning Inc.
Blake eLearning UK Limited
Blake eLearning China Pty Limited**
Principal place of business /
Country of incorporation
Ownership interest
30 June 2022 30 June 2021
%
%
Australia
Australia
Australia
New Zealand
United Kingdom
United States
Canada
Australia
United States
United Kingdom
China
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
85%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
85%
*
**
Entity deregistered on 21 July 2021.
Summarised financial information for subsidiaries that have non-controlling interests, has not been provided as they are
not material to the Group.
Note 33. Business combinations (prior year acquisition - restated)
Blake eLearning Pty Ltd (‘Blake’)
On 28 May 2021, the Group acquired 100% of the ordinary shares of Blake eLearning Pty Ltd and its controlled entities for
the total consideration transferred of $182,221,000. The values identified in relation to the acquisition of Blake as at 30 June
2021 were provisional and have now been finalised.
This has resulted in an increase in other receivables by $12,000, decrease in other payables and accruals by $1,345,000;
an increase in other payables due to working capital adjustment to vendors amounting to $189,000, an increase in contract
liabilities by $507,000, an increase in income tax payable by $569,000 and an increase in deferred tax asset by $563,000.
As a result, goodwill on acquisition decreased by $655,000. There was no impact on the comparative period statement of
profit or loss and other comprehensive income or the opening retained earnings. The fair value table below and the
comparative year statement of financial position as at 30 June 2021 have been adjusted accordingly.
68
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 33. Business combinations (prior year acquisition - restated) (continued)
Details of the acquisitions are as follows:
Cash and cash equivalents
Trade receivables
Inventories
Prepayments
Other receivables
Plant and equipment
Other intangible assets
Trade payables
Other payables and accruals
Contract liabilities
Provision for income tax
Deferred tax liability
Employee benefits
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
3P Learning Limited shares issued to vendor (refer note 21)
Non-controlling interest
Acquisition costs expensed to profit or loss (30 June 2021)
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: cash and cash equivalents
Less: shares issued by Company as part of consideration (refer note 21)
Less: Non-controlling interest
Net cash received
Note 34. Deed of cross guarantee
Fair value
$'000
3,605
4,032
217
219
423
103
32,363
(2,393)
(1,545)
(12,810)
(2,319)
(4,645)
(1,923)
15,327
166,894
182,221
182,210
11
182,221
4,047
182,221
(3,605)
(182,210)
(11)
(3,605)
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others:
3P Learning Limited (parent entity)
Blake eLearning Pty Ltd
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements
and directors' report under Corporations Instrument 2016/785 issued by the Australian Securities and Investments
Commission.
The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there are no other
parties to the deed of cross guarantee that are controlled by 3P Learning Limited, they also represent the 'Extended Closed
Group'.
69
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 34. Deed of cross guarantee (continued)
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial
position of the 'Closed Group':
Statement of profit or loss and other comprehensive income
30 June 2022 30 June 2021
$'000
$'000
Revenue
Other income
Interest income
Administrative expenses and foreign exchange
Deferred contract costs
Depreciation and amortisation expenses
Employee expenses
Finance costs
Impairment of assets
Marketing expenses
Occupancy expenses
Professional fees - corporate advisory costs
Professional fees - other
Technology costs
Profit/(loss) before income tax (expense)/benefit
Income tax (expense)/benefit
Profit/(loss) after income tax (expense)/benefit
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Profit/(loss) after income tax (expense)/benefit
Accumulated losses at the end of the financial year
68,940
6,648
22
(12,950)
(2,904)
(11,803)
(30,015)
(115)
-
(9,619)
(835)
(2,676)
(1,942)
(6,455)
(3,704)
(334)
21,572
63,119
45
(4,749)
(1,016)
(11,584)
(15,110)
(263)
(9,379)
(1,428)
(317)
(7,578)
(3,115)
(3,534)
26,663
3,329
(4,038)
29,992
-
-
(4,038)
29,992
30 June 2022 30 June 2021
$'000
$'000
(42,695)
(4,038)
(72,687)
29,992
(46,733)
(42,695)
70
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 34. Deed of cross guarantee (continued)
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Deferred contract costs
Other assets
Income tax receivable
Non-current assets
Investments
Plant and equipment
Intangibles
Right-of-use assets
Deferred contract costs
Deferred tax
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Provisions
Income tax payable
Non-current liabilities
Contract liabilities
Lease liabilities
Provisions
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
71
30 June 2022 30 June 2021
$'000
$'000
25,424
2,123
1,659
2,694
1,477
33,377
899
352
197,277
309
633
2,875
202,345
19,443
5,098
594
2,139
-
27,274
899
338
202,941
1,213
103
2,056
207,550
235,722
234,824
31,293
21,365
277
2,751
-
55,686
1,114
59
476
1,649
24,971
19,405
736
2,825
1,750
49,687
1,225
613
910
2,748
57,335
52,435
178,387
182,389
216,589
8,531
(46,733)
216,589
8,495
(42,695)
178,387
182,389
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 35. Cash flow information
Reconciliation of loss after income tax to net cash from operating activities
Loss after income tax benefit for the year
Adjustments for:
Depreciation and amortisation
Impairment of intangibles
Share-based payments
Foreign exchange differences
Net loss on disposal of assets
Change in operating assets and liabilities:
Decrease in trade and other receivables
Increase in deferred tax assets
(Increase)/decrease in deferred contract costs
Increase in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in contract liabilities
Increase/(decrease) in provision for income tax
Increase/(decrease) in employee benefits
Increase/(decrease) in other provisions
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(563)
(9,370)
11,937
-
36
(170)
160
4,366
(2,257)
(1,742)
(569)
447
6,149
(4,123)
(222)
(685)
8,313
4,818
(100)
525
-
2,330
(3,541)
19
(482)
(992)
(915)
127
175
388
Net cash from operating activities
12,764
1,295
Non-cash investing and financing activities
Additions to the right-of-use assets
Shares issued in relation to business combinations
Consolidated
30 June 2022 30 June 2021
$'000
$'000
1,425
-
48
182,210
1,425
182,258
72
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 35. Cash flow information (continued)
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2020
Net cash used in financing activities
Interest on lease liabilities
Acquisition of leases
Exchange differences
Other changes
Balance at 30 June 2021
Net cash used in financing activities
Interest on lease liabilities
Acquisition of leases
Exchange differences
Other changes
Balance at 30 June 2022
Note 36. Share-based payments
Lease
liabilities
$'000
4,844
(1,694)
141
48
(151)
(64)
3,124
(2,075)
106
1,425
209
(629)
2,160
The share-based payment expense for the year was $36,000 (2021: credit/reversal of $100,000).
An equity incentive plan has been established by the Group, whereby the Group may, at the discretion of the Board, grant
performance rights and options over ordinary shares in the Company ('awards') to certain key management personnel and
employees of the Group. The awards are issued for nil consideration and are granted in accordance with performance
guidelines established by the Board.
Set out below are summaries of options/awards granted under the plan:
30 June 2022
Grant date
Expiry date
23/08/2018
09/11/2018
23/08/2022
23/08/2022
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
$1.75
$1.75
691,562
2,867,647
3,559,209
-
-
-
-
-
-
(691,562)
(2,867,647)
(3,559,209)
-
-
-
Weighted average exercise price
$1.75
$0.00
$0.00
$1.75
$0.00
30 June 2021
Grant date
Expiry date
02/09/2016
21/11/2016
31/08/2017
09/11/2017
23/08/2018
09/11/2018
02/09/2020
02/09/2020
31/08/2021
31/08/2021
23/08/2022
23/08/2022
Exercise
price
Balance at
the start of
the year
Granted
Exercised
$1.26
$1.26
$1.42
$1.42
$1.75
$1.75
301,740
577,750
688,331
2,644,509
691,562
2,867,647
7,771,539
-
-
-
-
-
-
-
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
-
-
(301,740)
(577,750)
(688,331)
(2,644,509)
-
-
(4,212,330)
-
-
-
-
691,562
2,867,647
3,559,209
Weighted average exercise price
$1.55
$0.00
$0.00
$1.39
$1.75
73
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 36. Share-based payments (continued)
Outstanding options/awards vested and exercisable as at 30 June 2022: nil (2021: nil).
The weighted average share price during the financial year was $1.36 (2021: $1.23) per ordinary share. The weighted
average remaining contractual life of options/awards outstanding at the end of the financial year was nil years (2021: 1.14
years).
Share appreciation rights:
During the year, 2,130,456 share appreciation rights were granted at a fair value of $0.679 per right. The share appreciation
rights were granted with no exercise price and the fair value was determined based on the market value of the Company's
share price on the grant date. Vesting of share appreciation rights are subject to predetermined revenue and earnings per
share growth target.
Set out below are summaries of performance and share appreciation rights granted under the plan:
30 June 2022
Grant date
Vesting date
22/11/2019
21/12/2020
07/02/2022
03/06/2022
06/09/2022
31/08/2023
31/08/2024
31/08/2024
30 June 2021
Grant date
Vesting date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
$0.00
$0.00
$0.00
$0.00
641,760
293,989
-
-
935,749
-
-
1,949,037
181,419
2,130,456
Exercise
price
Balance at
the start of
the year
Granted
Exercised
22/11/2019
21/12/2020
06/09/2022
31/08/2023
$0.00
$0.00
641,760
-
641,760
-
293,989
293,989
Expired/
forfeited/
other
Balance at
the end of
the year
(641,760)
(183,076)
(261,710)
-
(1,086,546)
-
110,913
1,687,327
181,419
1,979,659
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
641,760
293,989
935,749
-
-
-
-
-
-
-
-
Performance and share appreciation rights vested and exercisable as at 30 June 2022 was nil (2021: nil). The weighted
average remaining contractual life of performance rights outstanding at the end of the financial year was 1.99 years (2021:
1.88 years).
For the share appreciation rights granted during the current financial year, the valuation model inputs used to determine the
fair value at the grant date, are as follows:
Grant date
Expiry date
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
Fair value
interest rate at grant date
07/02/2022
03/06/2022
31/08/2024
31/08/2024
$1.68
$1.68
$0.00
$0.00
36.00%
36.00%
-
-
1.71%
1.71%
$0.679
$0.679
74
3P Learning Limited
Notes to the financial statements
30 June 2022
Note 37. Earnings per share
Loss after income tax
Non-controlling interest
Loss after income tax attributable to the owners of 3P Learning Limited
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(563)
27
(9,370)
1
(536)
(9,369)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
276,484,170 152,245,814
Weighted average number of ordinary shares used in calculating diluted earnings per share
276,484,170 152,245,814
Basic earnings per share
Diluted earnings per share
Note 38. Events after the reporting period
Cents
Cents
(0.19)
(0.19)
(6.15)
(6.15)
No matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
75
3P Learning Limited
Directors' declaration
30 June 2022
In the directors' opinion:
●
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2022 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group
will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross
guarantee described in note 34 to the financial statements.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Matthew Sandblom
Executive Chairman
22 August 2022
Sydney
76
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor’s Report to the members of 3P Learning Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of 3P Learning Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
30 June 2022, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
and of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
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Impairment testing of intangible assets
Why significant
How our audit addressed the key audit matter
At 30 June 2022, the Group’s consolidated statement
of financial position included goodwill and other
intangible assets with a carrying value of $200.9
million, representing 78.0% of total assets. During the
year ended 30 June 2021, the Group recognised
$199.3 million in goodwill and other intangible assets
arising from business combinations. The acquired
goodwill and other intangible assets were allocated to
the Group’s CGUs during the year ended 30 June
2022.
The Directors have assessed goodwill and other
intangible assets for impairment. As disclosed within
Note 14 to the financial statements, the assessment
of the Group’s goodwill and other intangible assets
incorporated significant judgements and estimates,
based upon conditions existing at 30 June 2022,
specifically concerning factors such as forecast
cashflows, discount rates, and terminal growth rates.
The estimates and assumptions relate to the
sustainability of future performance, market and
economic conditions. The significant assumptions
used in the impairment testing are inherently
subjective.
This was considered to be a key audit matter due to
the value of the intangibles balance relative to the
Group’s total assets, and the judgement involved in
assessing the estimates included in the Group’s
impairment model.
Our audit procedures included the following:
► Assessed whether the models used by the
Directors in their impairment testing of the
carrying values of intangible assets met the
requirements of the Australian Accounting
Standards.
► Assessed the Group’s determination of the
cash generating units (CGUs) used in the
impairment assessment, based on our
understanding of the nature of the Group’s
business and the economic environment in
which the segments operate. We also
considered internal reporting of the Group’s
results to assess how earnings and goodwill
are monitored and reported.
► Assessed the Group’s allocation of additional
goodwill arising from the business
combination which occurred in the year
ending 30 June 2021, to CGUs used in the
impairment assessment.
► Assessed the cash flow forecasts,
assumptions and estimates used by the
Group, as outlined in Note 16 to the financial
statements, by considering the reliability of
the Group’s historical cash flow forecasts,
our knowledge of the business and
corroborating data with external information
where possible.
► Evaluated the appropriateness of discount
and terminal growth rates applied.
► Tested the mathematical accuracy of the
impairment testing models including the
consistency of relevant data with latest
Board approved forecasts.
► Performed sensitivity analysis on key
assumptions including discount rates,
terminal growth rates and cashflow forecasts
for each of the Group’s CGUs.
► We involved our valuation specialists in
performing these procedures where
appropriate.
► Assessed the adequacy of the disclosures
relating to intangible assets in the financial
statements, including those made with
respect to judgements and estimates.
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Revenue recognition
Why significant
The Group generated $97.2 million in revenue from
customers across its global operations for the year
ended 30 June 2022.
As disclosed in Notes 2 and 5 to the financial
statements, the Group’s revenue streams are either
recognised over time or at a point in time depending
on the identified performance obligations that the
Group has to the customer.
Given the importance of revenue to the users of the
financial statements, specifically as a key
performance indicator for the Group, this was
considered to be a key audit matter.
How our audit addressed the key audit matter
Our audit procedures included the following:
► Evaluated the Group’s revenue accounting
processes and assessed whether the Group’s
revenue accounting policies complied with
the requirements of Australian Accounting
Standards.
► Assessed the operating effectiveness of
relevant controls in place relating to the
recognition and measurement of revenue.
► Selected a sample of revenue transactions
and tested whether revenue was correctly
calculated and recognised in the correct
period. This included testing whether
revenue transactions were recognised as
deferred revenue at balance date where
applicable.
• Assessed the adequacy of the financial
report disclosures contained in Notes 2 and
5.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2022 annual report,but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
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Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
► Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
► Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
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80
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 27 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the Remuneration Report of 3P Learning Limited for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Renay Robinson
Partner
Sydney
22 August 2022
A member firm of Ernst & Young Global Limited
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81
3P Learning Limited
Shareholder information
30 June 2022
The shareholder information set out below was applicable as at 31 July 2022.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
Number
of holders
% of total
shares
issued
385
253
93
134
37
902
225
0.10
0.45
0.47
2.76
96.22
100.00
0.03
PASCAL EDUCATIONAL SERVICES PTY LTD
J P MORGAN NOMINEES AUSTRALIA TPY LIMITED
KPIT PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
PASCAL EDUCATIONAL SERVICES PTY LTD
MUTUAL TRUST PTY LTD
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
BLAKE BECKETT PTY LTD
MR SEAN PATRICK MARTIN
MUTUAL APPRECIATION SOCIETY PTY LIMITED
LEOPARD CAPITAL PTY LTD
LCONE PTY LTD
BRETTON PTY LTD
MR JONATHAN CLAUDE KENNY
MR KEI YAN CHENG
MANTOU REPUBLIC PTY LTD
NEPEAN SUPERANNUATION PTY LTD
Unquoted equity securities
Performance rights over ordinary shares issued
Share appreciation rights
82
Ordinary shares
Number held
% of total
shares
issued
80,200,000
49,430,195
40,850,000
30,018,423
28,826,480
13,700,000
12,263,944
2,755,555
2,477,500
2,195,604
2,000,000
795,567
415,740
404,920
343,309
300,000
288,856
284,280
277,124
254,584
268,082,081
29.01
17.88
14.77
10.86
10.43
4.96
4.44
1.00
0.90
0.79
0.72
0.29
0.15
0.15
0.12
0.11
0.10
0.10
0.10
0.09
96.97
Number
on issue
Number
of holders
752,673
1,868,746
2
6
3P Learning Limited
Shareholder information
30 June 2022
Substantial holders
Substantial holders in the Company are set out below:
Pascal Education Services Pty Ltd ATF Blake Sandblom Trust
Pascal Education Services Pty Ltd ATF BEL Unit Trust
KPIT Pty Ltd ATF KP Investment Trust
National Nominee ACF Australian Ethical Investment Limited
Viburnum Funds Pty Ltd
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Number held
80,200,000
13,790,000
40,850,000
25,505,191
50,813,840
% of total
shares
issued
29.01
4.99
14.77
9.22
18.38
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Options, performance and share appreciation rights
Options, performance rights and share appreciation rights carry no voting rights.
There are no other classes of equity securities.
83
3P Learning Limited
Corporate directory
30 June 2022
Directors
Matthew Sandblom - Executive Chairman
Mark Lamont - Non-Executive Director
Katherine Ostin - Non-Executive Director
Allan Brackin - Non-Executive Director
Belinda Rowe - Non-Executive Director
Chief Executive Officer
Jose Palmero
Company secretary
Elizabeth Wang
Joyce Li
Registered office and
Principal place of business
Share register
Auditor
3P Learning Limited
655 Parramatta Road, Leichhardt
NSW 2040
Head office telephone: 1300 850 331
The Registrar
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Share registry telephone: 1300 554 474
Ernst & Young
200 George Street
Sydney NSW 2000
Stock exchange listing
3P Learning Limited shares are listed on the Australian Securities Exchange
(ASX code: 3PL)
Website
http://www.3plearning.com/
Corporate Governance Statement
The directors and management are committed to conducting the business of 3P
Learning Limited in an ethical manner and in accordance with the highest standards
of corporate governance. 3P Learning Limited has adopted and has substantially
complied with the ASX Corporate Governance Principles and Recommendations
(Fourth Edition) ('Recommendations') to the extent appropriate to the size and nature
of its operations.
The Group’s Corporate Governance Statement, which sets out the corporate
governance practices that were in operation during the financial year and identifies
and explains any Recommendations that have not been followed and ASX Appendix
4G are released to the ASX on the same day the Annual Report is released. The
Corporate Governance Statement and Corporate Governance Compliance Manual
can be found on the company’s website at http://www.3plearning.com/investors/
governance/.
84